<PAGE>1
As filed with the Securities and Exchange Commission
on January 16, 1996
Securities Act File No. 33-36066
Investment Company Act File No. 811-06143
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 6 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 8 [X]
(Check appropriate box or boxes)
Warburg, Pincus Global Fixed Income Fund, Inc.
(formerly Counsellors Global Fixed Income Fund, Inc.)
. . . . . . . . . . . . . . . . . . . . . .
(Exact Name of Registrant as Specified in Charter)
466 Lexington Avenue
New York, New York 10017-3147
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 878-0600
Mr. Eugene P. Grace
Warburg, Pincus Global Fixed Income Fund, Inc.
466 Lexington Avenue
New York, New York 10017-3147
. . . . . . . . . . . . . . . . . . . . .
(Name and Address of Agent for Service)
Copy to:
Rose F. DiMartino, Esq.
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4667
<PAGE>2
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[X] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
DECLARATION PURSUANT TO RULE 24f-2
Registrant has registered an indefinite number or amount of securities under
the Securities Act of 1933, as amended (the "1933 Act"), pursuant to Section
(a)(1) of Rule 24f-2 under the Investment Company Act of 1940, as amended (the
"1940 Act"), and to the number or amount presently registered is added an
indefinite number or amount of such securities. The Rule 24f-2 Notice for
Registrant's fiscal year ended October 31, 1995 was filed on December 19,
1995.
<PAGE>3
WARBURG, PINCUS GLOBAL FIXED INCOME FUND
Calculation of Registration Fee under the Securities Act of 1933
Title of Proposed Proposed
Securities Amount Maximum Maximum Amount of
Being Being Offering Price Aggregate Registration
Registered Registered Per Share (1) Offering Price (1,2) Fee (2)
- ---------- ---------- -------------- -------------------- ------------
Shares of
Common
Stock
$.001 2,909,714 $10.97 $289,992 $100
par value
per share
This Post-Effective Amendment No. 6 seeks to register 2,909,714
additional shares under the 1933 Act.
(1) Computed under Rule 457(d) on the basis of the net asset value per
share of the Registrant's shares at the close of business on January
5, 1996. The above calculation shall not be deemed a representation
of the actual offering price.
(2) Calculated pursuant to Rule 24e-2 under the 1940 Act.
(a) Total number of shares
redeemed during previous
fiscal year 7,231,335
(b) Total number of shares
included in (a) previously
used under Rule 24e-2 this
fiscal year 0
(c) Total number of shares
included in (a) previously
used under Rule 24f-2(c)
this fiscal year 4,348,056
(d) Total number of shares
included in (a) being used
to reduce maximum aggregate
offering price in this
Post-Effective Amendment 2,883,279
<PAGE>4
WARBURG, PINCUS GLOBAL FIXED INCOME FUND
FORM N-1A
CROSS REFERENCE SHEET
_______________________________
Part A
Item No. Prospectus Heading*
-------- --------------------
1. Cover Page . . . . Cover Page
2. Synopsis . . . . . The Funds' Expenses
3. Condensed Financial
Information . . . Financial Highlights
4. General Description
of Registrant . . Cover Page; Investment
Objective and
Policies; Portfolio
Investments; Risk
Factors and Special
Considerations;
Certain Investment
Strategies;
Investment
Guidelines; General
Information
5. Management of the Management of the Funds
Fund . . . . . .
6. Capital Stock and
Other Securities . General Information
7. Purchase of
Securities How to Open an Account; How to
Being Offered Purchase Shares; Net
Asset Value
8. Redemption or How to Redeem and Exchange
Repurchase . . . Shares
9. Legal
Proceedings . . . Not applicable
- ------------------------
* Relates to Registrant's Common Share prospectus, which is substantially
similar to Registrant's Advisor Share prospectus.
<PAGE>5
Part B Heading in Statement of
Item No. Additional Information
-------- -----------------------
10. Cover Page . . . . Cover Page
11. Table of Contents . Contents
12. General Information
and History . . . Management of the Fund; Notes
to Financial
Statements; See
Prospectus--"General
Information"
13. Investment
Objectives and Investment Objective;
Policies . . . . Investment Policies
14. Management of the
Registrant . . . Management of the Fund; See
Prospectus--
"Management of the
Funds"
15. Control Persons and
Principal Holders
of Securities . . . Management of the Fund;
Miscellaneous; See
Prospectus--"General
Information"
16. Investment Advisory
and Other Services . . Management of the Fund; See
Prospectus--"-Management of the
Funds" and "Shareholder
Servicing"
17. Brokerage Investment Policies; See
Allocation . . Prospectus--
"Portfolio
Transactions and
Turnover Rate"
18. Capital Stock and
Other Securities . . Management of the Fund--
Organization of the
Fund; See Prospectus--"General
Information"
<PAGE>6
Part B Heading in Statement of
Item No. Additional Information
-------- -----------------------
19. Purchase, Redemption
and Pricing of
Securities Being Additional Purchase and
Offered . . . . . . Redemption
Information; See
Prospectus--"How to
Open an Account,"
"How to Purchase
Shares," "How to
Redeem and Exchange
Shares" and "Net
Asset Value"
20. Tax Status . . . . Additional Information
Concerning Taxes;
See
Prospectus--"Dividen
ds, Distributions
and Taxes"
21. Underwriters . . . Investment Policies; Portfolio
Transactions; See
Prospectus --
"Management of the
Funds" and
"Shareholder
Servicing"
22. Calculation of
Performance Data Determination of Performance
23. Financial Report of Independent
Statements . . Auditors; Financial
Statements
Part C
- ------
Information required to be included in Part C is set forth after the
appropriate item, so numbered, in Part C to this Registration Statement.
<PAGE>
PROSPECTUS
The Fund's Common Share and Advisor Prospectuses are incorporated
by reference to the Prospectuses that form a part of Post-Effective Amendment
No. 13 to the Registration Statement on Form N-1A of Warburg, Pincus Fixed
Income Fund filed on January 16, 1996 (Securities Act File No. 33-12343;
Investment Co. Act File No. 811-5039).
<PAGE>1
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT CONSTITUTE A
PROSPECTUS.
<PAGE>1
Subject to Completion, dated January 16, 1996
STATEMENT OF ADDITIONAL INFORMATION
____________, 1996
WARBURG PINCUS GLOBAL FIXED INCOME FUND
P.O. Box 9030, Boston, Massachusetts 02205-9030
For information, call (800) 888-6878
Contents
Page
----
Investment Objective . . . . . . . . . . . . . . . . . 2
Investment Policies . . . . . . . . . . . . . . . . . . 2
Management of the Fund . . . . . . . . . . . . . . . . 27
Additional Purchase and Redemption Information . . . . 34
Exchange Privilege . . . . . . . . . . . . . . . . . . 35
Additional Information Concerning Taxes . . . . . . . . 35
Determination of Performance . . . . . . . . . . . . . 38
Auditors and Counsel . . . . . . . . . . . . . . . . . 39
Miscellaneous . . . . . . . . . . . . . . . . . . . . . 40
Financial Statements . . . . . . . . . . . . . . . . . 40
Appendix - Description of Ratings . . . . . . . . . . . A-1
Report of Coopers & Lybrand L.L.P.,
Independent Accountants . . . . . . . . . . . . . . . A-5
This Statement of Additional Information is meant to be read in
conjunction with the combined Prospectus for the Common Shares of Warburg
Pincus Global Fixed Income Fund (the "Fund"), Warburg Pincus Intermediate
Maturity Government Fund and Warburg Pincus New York Intermediate Municipal
Fund, dated , 1996, as amended or supplemented from time to time,
and is incorporated by reference in its entirety into those Prospectuses.
Because this Statement of Additional Information is not itself a prospectus,
no investment in shares of the Fund should be made solely upon the information
contained herein. Copies of the Fund's Prospectuses and information regarding
the Fund's current performance may be obtained by calling the Fund at
(800) 927-2874. Information regarding the status of shareholder accounts may
be obtained by calling the Fund at (800) 888-6878 or by writing to the Fund,
P.O. Box 9030, Boston, Massachusetts 02205-9030.
<PAGE>2
INVESTMENT OBJECTIVE
The investment objective of the Fund is to maximize total investment
return consistent with prudent investment management, consisting of a
combination of interest income, currency gains and capital appreciation.
INVESTMENT POLICIES
The following policies supplement the descriptions of the Fund's
investment objective and policies in the Prospectuses.
Options, Futures and Currency Exchange Transactions
Securities Options. The Fund may write covered put and call options
on stock and debt securities and may purchase such options that are traded on
foreign and U.S. exchanges, as well as over-the-counter ("OTC").
The Fund realizes fees (referred to as "premiums") for granting the
rights evidenced by the options it has written. A put option embodies the
right of its purchaser to compel the writer of the option to purchase from the
option holder an underlying security at a specified price for a specified time
period or at a specified time. In contrast, a call option embodies the right
of its purchaser to compel the writer of the option to sell to the option
holder an underlying security at a specified price for a specified time period
or at a specified time.
The principal reason for writing covered options on a security is to
attempt to realize, through the receipt of premiums, a greater return than
would be realized on the securities alone. In return for a premium, the Fund
as the writer of a covered call option forfeits the right to any appreciation
in the value of the underlying security above the strike price for the life of
the option (or until a closing purchase transaction can be effected).
Nevertheless, the Fund as a put or call writer retains the risk of a decline
in the price of the underlying security. The size of the premiums that the
Fund may receive may be adversely affected as new or existing institutions,
including other investment companies, engage in or increase their
option-writing activities.
If security prices rise, a put writer would generally expect to
profit, although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that the
writer will also profit, because it should be able to close out the option at
a lower price. If security prices fall, the put writer would expect to suffer
a loss. This loss should be less than the loss from purchasing the underlying
instrument directly, however, because the premium received for writing the
option should mitigate the effects of the decline.
<PAGE>3
In the case of options written by the Fund that are deemed covered
by virtue of the Fund's holding convertible or exchangeable preferred stock or
debt securities, the time required to convert or exchange and obtain physical
delivery of the underlying securities with respect to which the Fund has
written options may exceed the time within which the Fund must make delivery
in accordance with an exercise notice. In these instances, the Fund may
purchase or temporarily borrow the underlying securities for purposes of
physical delivery. By so doing, the Fund will not bear any market risk, since
the Fund will have the absolute right to receive from the issuer of the
underlying security an equal number of shares to replace the borrowed
securities, but the Fund may incur additional transaction costs or interest
expenses in connection with any such purchase or borrowing.
Additional risks exist with respect to certain of the securities for
which the Fund may write covered call options. For example, if the Fund
writes covered call options on mortgage-backed securities, the mortgage-backed
securities that it holds as cover may, because of scheduled amortization or
unscheduled prepayments, cease to be sufficient cover. If this occurs, the
Fund will compensate for the decline in the value of the cover by purchasing
an appropriate additional amount of mortgage-backed securities.
Options written by the Fund will normally have expiration dates
between one and nine months from the date written. The exercise price of the
options may be below, equal to or above the market values of the underlying
securities at the times the options are written. In the case of call options,
these exercise prices are referred to as "in-the-money," "at-the-money" and
"out-of-the-money," respectively. The Fund may write (i) in-the-money call
options when Warburg, Pincus Counsellors, Inc., the Fund's investment adviser
("Warburg"), expects that the price of the underlying security will remain
flat or decline moderately during the option period, (ii) at-the-money call
options when Warburg expects that the price of the underlying security will
remain flat or advance moderately during the option period and
(iii) out-of-the-money call options when Warburg expects that the premiums
received from writing the call option plus the appreciation in market price of
the underlying security up to the exercise price will be greater than the
appreciation in the price of the underlying security alone. In any of the
preceding situations, if the market price of the underlying security declines
and the security is sold at this lower price, the amount of any realized loss
will be offset wholly or in part by the premium received. Out-of-the-money,
at-the-money and in-the-money put options (the reverse of call options as to
the relation of exercise price to market price) may be used in the same market
environments that such call options are used in equivalent transactions. To
secure its obligation to deliver the underlying security when it writes a call
option, the Fund will be required to deposit in escrow the underlying security
or other assets in accordance with the rules of the Options Clearing
Corporation (the "Clearing Corporation") and of the securities exchange on
which the option is written.
Prior to their expirations, put and call options may be sold in
closing sale or purchase transactions (sales or purchases by the Fund prior to
the exercise of options that it has purchased or written, respectively, of
options of the same series) in which the Fund may
<PAGE>4
realize a profit or loss from the sale. An option position may be closed out
only where there exists a secondary market for an option of the same series on
a recognized securities exchange or in the over-the-counter market. When the
Fund has purchased an option and engages in a closing sale transaction,
whether the Fund realizes a profit or loss will depend upon whether the amount
received in the closing sale transaction is more or less than the premium the
Fund initially paid for the original option plus the related transaction
costs. Similarly, in cases where the Fund has written an option, it will
realize a profit if the cost of the closing purchase transaction is less than
the premium received upon writing the original option and will incur a loss if
the cost of the closing purchase transaction exceeds the premium received upon
writing the original option. The Fund may engage in a closing purchase
transaction to realize a profit, to prevent an underlying security with
respect to which it has written an option from being called or put or, in the
case of a call option, to unfreeze an underlying security (thereby permitting
its sale or the writing of a new option on the security prior to the
outstanding option's expiration). The obligation of the Fund under an option
it has written would be terminated by a closing purchase transaction, but the
Fund would not be deemed to own an option as a result of the transaction. So
long as the obligation of the Fund as the writer of an option continues, the
Fund may be assigned an exercise notice by the broker-dealer through which the
option was sold, requiring the Fund to deliver the underlying security against
payment of the exercise price. This obligation terminates when the option
expires or the Fund effects a closing purchase transaction. The Fund can no
longer effect a closing purchase transaction with respect to an option once it
has been assigned an exercise notice.
There is no assurance that sufficient trading interest will exist to
create a liquid secondary market on a securities exchange for any particular
option or at any particular time, and for some options no such secondary
market may exist. A liquid secondary market in an option may cease to exist
for a variety of reasons. In the past, for example, higher than anticipated
trading activity or order flow or other unforeseen events have at times
rendered certain of the facilities of the Clearing Corporation and various
securities exchanges inadequate and resulted in the institution of special
procedures, such as trading rotations, restrictions on certain types of orders
or trading halts or suspensions in one or more options. There can be no
assurance that similar events, or events that may otherwise interfere with the
timely execution of customers' orders, will not recur. In such event, it
might not be possible to effect closing transactions in particular options.
Moreover, the Fund's ability to terminate options positions established in the
over-the-counter market may be more limited than for exchange-traded options
and may also involve the risk that securities dealers participating in
over-the-counter transactions would fail to meet their obligations to the
Fund. The Fund, however, intends to purchase over-the-counter options only
from dealers whose debt securities, as determined by Warburg, are considered
to be investment grade. If, as a covered call option writer, the Fund is
unable to effect a closing purchase transaction in a secondary market, it will
not be able to sell the underlying security until the option expires or it
delivers the underlying security upon exercise. In either case, the Fund
would continue to be at market risk on the security and could face higher
transaction costs, including brokerage commissions.
<PAGE>5
Securities exchanges generally have established limitations
governing the maximum number of calls and puts of each class which may be held
or written, or exercised within certain time periods by an investor or group
of investors acting in concert (regardless of whether the options are written
on the same or different securities exchanges or are held, written or
exercised in one or more accounts or through one or more brokers). It is
possible that the Fund and other clients of Warburg and certain of its
affiliates may be considered to be such a group. A securities exchange may
order the liquidation of positions found to be in violation of these limits
and it may impose certain other sanctions. These limits may restrict the
number of options the Fund will be able to purchase on a particular security.
Securities Index Options. The Fund may purchase and write
exchange-listed and OTC put and call options on securities indexes. A
securities index measures the movement of a certain group of securities by
assigning relative values to the securities included in the index, fluctuating
with changes in the market values of the securities included in the index.
Securities index options may be based on a broad or narrow market index or on
a particular industry or market segment.
Options on securities indexes are similar to options on securities
except that (i) the expiration cycles of securities index options are monthly,
while those of securities options are currently quarterly, and (ii) the
delivery requirements are different. Instead of giving the right to take or
make delivery of securities at a specified price, an option on a securities
index gives the holder the right to receive a cash "exercise settlement
amount" equal to (a) the amount, if any, by which the fixed exercise price of
the option exceeds (in the case of a put) or is less than (in the case of a
call) the closing value of the underlying index on the date of exercise,
multiplied by (b) a fixed "index multiplier." Receipt of this cash amount
will depend upon the closing level of the index upon which the option is based
being greater than, in the case of a call, or less than, in the case of a put,
the exercise price of the index and the exercise price of the option times a
specified multiple. The writer of the option is obligated, in return for the
premium received, to make delivery of this amount. Index options may be
offset by entering into closing transactions as described above for securities
options.
OTC Options. The Fund may purchase OTC or dealer options or sell
covered OTC options. Unlike exchange-listed options where an intermediary or
clearing corporation, such as the Clearing Corporation, assures that all
transactions in such options are properly executed, the responsibility for
performing all transactions with respect to OTC options rests solely with the
writer and the holder of those options. A listed call option writer, for
example, is obligated to deliver the underlying securities to the clearing
organization if the option is exercised, and the clearing organization is then
obligated to pay the writer the exercise price of the option. If the Fund
were to purchase a dealer option, however, it would rely on the dealer from
whom it purchased the option to perform if the option were exercised. If the
dealer fails to honor the exercise of the option by the Fund, the Fund would
lose the premium it paid for the option and the expected benefit of the
transaction.
<PAGE>6
Listed options generally have a continuous liquid market while
dealer options have none. Consequently, the Fund will generally be able to
realize the value of a dealer option it has purchased only by exercising it or
reselling it to the dealer who issued it. Similarly, when the Fund writes a
dealer option, it generally will be able to close out the option prior to its
expiration only by entering into a closing purchase transaction with the
dealer to which the Fund originally wrote the option. Although the Fund will
seek to enter into dealer options only with dealers who will agree to and that
are expected to be capable of entering into closing transactions with the
Fund, there can be no assurance that the Fund will be able to liquidate a
dealer option at a favorable price at any time prior to expiration. The
inability to enter into a closing transaction may result in material losses to
the Fund. Until the Fund, as a covered OTC call option writer, is able to
effect a closing purchase transaction, it will not be able to liquidate
securities (or other assets) used to cover the written option until the option
expires or is exercised. This requirement may impair the Fund's ability to
sell portfolio securities or, with respect to currency options, currencies at
a time when such sale might be advantageous. In the event of insolvency of
the other party, the Fund may be unable to liquidate a dealer option.
Futures Activities. The Fund may enter into foreign currency,
interest rate and securities index futures contracts and purchase and write
(sell) related options traded on exchanges designated by the Commodity Futures
Trading Commission (the "CFTC") or consistent with CFTC regulations on foreign
exchanges. These transactions may be entered into for "bona fide hedging"
purposes as defined in CFTC regulations and other permissible purposes
including hedging against changes in the value of portfolio securities due to
anticipated changes in currency values, interest rates and/or market
conditions and increasing return.
The Fund will not enter into futures contracts and related options
for which the aggregate initial margin and premiums (discussed below) required
to establish positions other than those considered to be "bona fide hedging"
by the CFTC exceed 5% of the Fund's net asset value after taking into account
unrealized profits and unrealized losses on any such contracts it has entered
into. The Fund reserves the right to engage in transactions involving futures
contracts and options on futures contracts to the extent allowed by CFTC
regulations in effect from time to time and in accordance with the Fund's
policies. Although the Fund is limited in the amount of assets it may invest
in futures transactions (as described above and in the Prospectus), there is
no overall limit on the percentage of Fund assets that may be at risk with
respect to futures activities. The ability of the Fund to trade in futures
contracts and options on futures contracts may be limited by the requirements
of the Internal Revenue Code of 1986, as amended (the "Code"), applicable to a
regulated investment company.
Futures Contracts. A foreign currency futures contract provides for
the future sale by one party and the purchase by the other party of a certain
amount of a specified non-U.S. currency at a specified price, date, time and
place. An interest rate futures contract provides for the future sale by one
party and the purchase by the other party of a certain amount of a specific
interest rate sensitive financial instrument (debt security) at a specified
<PAGE>7
price, date, time and place. Securities indexes are capitalization weighted
indexes which reflect the market value of the securities listed on the
indexes. A securities index futures contract is an agreement to be settled by
delivery of an amount of cash equal to a specified multiplier times the
difference between the value of the index at the close of the last trading day
on the contract and the price at which the agreement is made.
No consideration is paid or received by the Fund upon entering into
a futures contract. Instead, the Fund is required to deposit in a segregated
account with its custodian an amount of cash or cash equivalents, such as U.S.
government securities or other liquid high-grade debt obligations, equal to
approximately 1% to 10% of the contract amount (this amount is subject to
change by the exchange on which the contract is traded, and brokers may charge
a higher amount). This amount is known as "initial margin" and is in the
nature of a performance bond or good faith deposit on the contract which is
returned to the Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied. The broker will have access to
amounts in the margin account if the Fund fails to meet its contractual
obligations. Subsequent payments, known as "variation margin," to and from
the broker, will be made daily as the currency, financial instrument or index
underlying the futures contract fluctuates, making the long and short
positions in the futures contract more or less valuable, a process known as
"marking-to-market." The Fund will also incur brokerage costs in connection
with entering into futures transactions.
At any time prior to the expiration of a futures contract, the Fund
may elect to close the position by taking an opposite position, which will
operate to terminate the Fund's existing position in the contract. Positions
in futures contracts and options on futures contracts (described below) may be
closed out only on the exchange on which they were entered into (or through a
linked exchange). No secondary market for such contracts exists. Although
the Fund intends to enter into futures contracts only if there is an active
market for such contracts, there is no assurance that an active market will
exist at any particular time. Most futures exchanges limit the amount of
fluctuation permitted in futures contract prices during a single trading day.
Once the daily limit has been reached in a particular contract, no trades may
be made that day at a price beyond that limit or trading may be suspended for
specified periods during the day. It is possible that futures contract prices
could move to the daily limit for several consecutive trading days with little
or no trading, thereby preventing prompt liquidation of futures positions at
an advantageous price and subjecting the Fund to substantial losses. In such
event, and in the event of adverse price movements, the Fund would be required
to make daily cash payments of variation margin. In such situations, if the
fund had insufficient cash, it might have to sell securities to meet daily
variation margin requirements at a time when it would be disadvantageous to do
so. In addition, if the transaction is entered into for hedging purposes, in
such circumstances the Fund may realize a loss on a futures contract or option
that is not offset by an increase in the value of the hedged position. Losses
incurred in futures transactions and the costs of these transactions will
affect the Fund's performance.
<PAGE>8
Options on Futures Contracts. The Fund may purchase and write put
and call options on foreign currency, interest rate and securities index
futures contracts and may enter into closing transactions with respect to such
options to terminate existing positions. There is no guarantee that such
closing transactions can be effected; the ability to establish and close out
positions on such options will be subject to the existence of a liquid market.
An option on a currency, interest rate or securities index futures
contract, as contrasted with the direct investment in such a contract, gives
the purchaser the right, in return for the premium paid, to assume a position
in a futures contract at a specified exercise price at any time prior to the
expiration date of the option. The writer of the option is required upon
exercise to assume an offsetting futures position (a short position if the
option is a call and a long position if the option is a put). Upon exercise
of an option, the delivery of the futures position by the writer of the option
to the holder of the option will be accompanied by delivery of the accumulated
balance in the writer's futures margin account, which represents the amount by
which the market price of the futures contract exceeds, in the case of a call,
or is less than, in the case of a put, the exercise price of the option on the
futures contract. The potential loss related to the purchase of an option on
futures contracts is limited to the premium paid for the option (plus
transaction costs). Because the value of the option is fixed at the point of
sale, there are no daily cash payments by the purchaser to reflect changes in
the value of the underlying contract; however, the value of the option does
change daily and that change would be reflected in the net asset value of the
Fund.
Currency Exchange Transactions. The value in U.S. dollars of the
assets of the Fund that are invested in foreign securities may be affected
favorably or unfavorably by changes in exchange control regulations, and the
Fund may incur costs in connection with conversion between various currencies.
Currency exchange transactions may be from any non-U.S. currency into U.S.
dollars or into other appropriate currencies. The Fund will conduct its
currency exchange transactions (i) on a spot (i.e., cash) basis at the rate
prevailing in the currency exchange market, (ii) through entering into futures
contracts or options on such contracts (as described above), (iii) through
entering into forward contracts to purchase or sell currency or (iv) by
purchasing and writing exchange-traded currency options.
Forward Currency Contracts. A forward currency contract involves
an obligation to purchase or sell a specific currency at a future date, which
may be any fixed number of days from the date of the contract as agreed upon
by the parties, at a price set at the time of the contract. These contracts
are entered into in the interbank market conducted directly between currency
traders (usually large commercial banks and brokers) and their customers.
Forward currency contracts are similar to currency futures contracts, except
that futures contracts are traded on commodities exchanges and are
standardized as to contract size and delivery date.
At or before the maturity of a forward contract, the Fund may either
sell a portfolio security and make delivery of the currency, or retain the
security and fully or
<PAGE>9
partially offset its contractual obligation to deliver the currency by
negotiating with its trading partner to purchase a second, offsetting
contract. If the Fund retains the portfolio security and engages in an
offsetting transaction, the Fund, at the time of execution of the offsetting
transaction, will incur a gain or a loss to the extent that movement has
occurred in forward contract prices.
Currency Options. The Fund may purchase and write exchange-traded
put and call options on foreign currencies. Put options convey the right to
sell the underlying currency at a price which is anticipated to be higher than
the spot price of the currency at the time the option is exercised. Call
options convey the right to buy the underlying currency at a price which is
expected to be lower than the spot price of the currency at the time the
option is exercised.
Currency Hedging. The Fund's currency hedging will be limited to
hedging involving either specific transactions or portfolio positions.
Transaction hedging is the purchase or sale of forward currency with respect
to specific receivables or payables of the Fund generally accruing in
connection with the purchase or sale of its portfolio securities. Position
hedging is the sale of forward currency with respect to portfolio security
positions. The Fund may not position hedge to an extent greater than the
aggregate market value (at the time of entering into the hedge) of the hedged
securities.
A decline in the U.S. dollar value of a foreign currency in which
the Fund's securities are denominated will reduce the U.S. dollar value of the
securities, even if their value in the foreign currency remains constant. The
use of currency hedges does not eliminate fluctuations in the underlying
prices of the securities, but it does establish a rate of exchange that can be
achieved in the future. For example, in order to protect against diminutions
in the U.S. dollar value of securities it holds, the Fund may purchase
currency put options. If the value of the currency does decline, the Fund
will have the right to sell the currency for a fixed amount in dollars and
will thereby offset, in whole or in part, the adverse effect on the U.S.
dollar value of its securities that otherwise would have resulted.
Conversely, if a rise in the U.S. dollar value of a currency in which
securities to be acquired are denominated is projected, thereby potentially
increasing the cost of the securities, the Fund may purchase call options on
the particular currency. The purchase of these options could offset, at least
partially, the effects of the adverse movements in exchange rates. The
benefit to the Fund derived from purchases of currency options, like the
benefit derived from other types of options, will be reduced by premiums and
other transaction costs. Because transactions in currency exchange are
generally conducted on a principal basis, no fees or commissions are generally
involved. Currency hedging involves some of the same risks and considerations
as other transactions with similar instruments. Although currency hedges
limit the risk of loss due to a decline in the value of a hedged currency, at
the same time, they also limit any potential gain that might result should the
value of the currency increase. If a devaluation is generally anticipated,
the Fund may not be able to contract to sell a currency at a price above the
devaluation level it anticipates.
<PAGE>10
While the values of currency futures and options on futures, forward
currency contracts and currency options may be expected to correlate with
exchange rates, they will not reflect other factors that may affect the value
of the Fund's investments and a currency hedge may not be entirely successful
in mitigating changes in the value of the Fund's investments denominated in
that currency. A currency hedge, for example, should protect a Yen-
denominated bond against a decline in the Yen, but will not protect the Fund
against a price decline if the issuer's creditworthiness deteriorates.
Hedging. In addition to entering into options, futures and currency
exchange transactions for other purposes, including generating current income
to offset expenses or increase return, the Fund may enter into these
transactions as hedges to reduce investment risk, generally by making an
investment expected to move in the opposite direction of its portfolio
position. A hedge is designed to offset a loss in a portfolio position with a
gain in the hedged position; at the same time, however, a properly correlated
hedge will result in a gain in the portfolio position being offset by a loss
in the hedged position. As a result, the use of options, futures, contracts
and currency exchange transactions for hedging purposes could limit any
potential gain from an increase in the value of the position hedged. In
addition, the movement in the portfolio position hedged may not be of the same
magnitude as movement in the hedge. With respect to futures contracts, since
the value of portfolio securities will far exceed the value of the futures
contracts sold by the Fund, an increase in the value of the futures contracts
could only mitigate, but not totally offset, the decline in the value of the
Fund's assets.
In hedging transactions based on an index, whether the Fund will
realize a gain or loss from the purchase or writing of options on an index
depends upon movements in the level of securities prices in the market
generally or, in the case of certain indexes, in an industry or market
segment, rather than movements in the price of a particular security. The
risk of imperfect correlation increases as the composition of the Fund's
portfolio varies from the composition of the index. In an effort to
compensate for imperfect correlation of relative movements in the hedged
position and the hedge, the Fund's hedge positions may be in a greater or
lesser dollar amount than the dollar amount of the hedged position. Such
"over hedging" or "under hedging" may adversely affect the Fund's net
investment results if market movements are not as anticipated when the hedge
is established. Securities index futures transactions may be subject to
additional correlation risks. First, all participants in the futures market
are subject to margin deposit and maintenance requirements. Rather than
meeting additional margin deposit requirements, investors may close futures
contracts through offsetting transactions which would distort the normal
relationship between the index and futures markets. Secondly, from the point
of view of speculators, the deposit requirements in the futures market are
less onerous than margin requirements in the securities market. Therefore,
increased participation by speculators in the futures market also may cause
temporary price distortions. Because of the possibility of price distortions
in the futures market and the imperfect correlation between movements in an
index and movements in the price of index futures, a correct forecast of
general market trends by Warburg still may not result in a successful hedging
transaction.
<PAGE>11
The Fund will engage in hedging transactions only when deemed
advisable by Warburg, and successful use by the Fund of hedging transactions
will be subject to Warburg's ability to predict trends in currency, interest
rate or securities markets, as the case may be, and to correctly predict
movements in the directions of the hedge and the hedged position and the
correlation between them, which predictions could prove to be inaccurate.
This requires different skills and techniques than predicting changes in the
price of individual securities, and there can be no assurance that the use of
these strategies will be successful. Even a well-conceived hedge may be
unsuccessful to some degree because of unexpected market behavior or trends.
Losses incurred in hedging transactions and the costs of these transactions
will affect the Fund's performance.
Asset Coverage for Forward Contracts, Options, Futures and Options
on Futures. As described in the Prospectuses, the Fund will comply with
guidelines established by the U.S. Securities and Exchange Commission (the
"SEC") with respect to coverage of forward currency contracts; options written
by the Fund on securities, indexes and currencies; and currency, interest rate
and index futures contracts and options on these futures contracts. These
guidelines may, in certain instances, require segregation by the Fund of cash
or liquid high-grade debt securities or other securities that are acceptable
as collateral to the appropriate regulatory authority.
For example, a call option written by the Fund on securities may
require the Fund to hold the securities subject to the call (or securities
convertible into the securities without additional consideration) or to
segregate assets (as described above) sufficient to purchase and deliver the
securities if the call is exercised. A call option written by the Fund on an
index may require the Fund to own portfolio securities that correlate with the
index or to segregate assets (as described above) equal to the excess of the
index value over the exercise price on a current basis. A put option written
by the Fund may require the Fund to segregate assets (as described above)
equal to the exercise price. The Fund could purchase a put option if the
strike price of that option is the same or higher than the strike price of a
put option sold by the Fund. If the Fund holds a futures or forward contract,
the Fund could purchase a put option on the same futures or forward contract
with a strike price as high or higher than the price of the contract held.
The Fund may enter into fully or partially offsetting transactions so that its
net position, coupled with any segregated assets (equal to any remaining
obligation), equals its net obligation. Asset coverage may be achieved by
other means when consistent with applicable regulatory policies.
Additional Information on Other Investment Practices
Foreign Investments. Investors should recognize that investing in
foreign companies involves certain risks, including those discussed below,
which are not typically associated with investing in U.S. issuers.
<PAGE>12
Foreign Currency Exchange. Since the Fund will be investing
substantially in securities denominated in currencies of non-U.S. countries,
and since the Fund may temporarily hold funds in bank deposits or other money
market investments denominated in foreign currencies, the Fund may be affected
favorably or unfavorably by exchange control regulations or changes in the
exchange rate between such currencies and the dollar. A change in the value
of a foreign currency relative to the U.S. dollar will result in a
corresponding change in the dollar value of the Fund assets denominated in
that foreign currency. Changes in foreign currency exchange rates may also
affect the value of dividends and interest earned, gains and losses realized
on the sale of securities and net investment income and gains, if any, to be
distributed to shareholders by the Fund. The rate of exchange between the
U.S. dollar and other currencies is determined by the forces of supply and
demand in the foreign exchange markets. Changes in the exchange rate may
result over time from the interaction of many factors directly or indirectly
affecting economic and political conditions in the United States and a
particular foreign country, including economic and political developments in
other countries. Of particular importance are rates of inflation, interest
rate levels, the balance of payments and the extent of government surpluses or
deficits in the United States and the particular foreign country, all of which
are in turn sensitive to the monetary, fiscal and trade policies pursued by
the governments of the United States and foreign countries important to
international trade and finance. Governmental intervention may also play a
significant role. National governments rarely voluntarily allow their
currencies to float freely in response to economic forces. Sovereign
governments use a variety of techniques, such as intervention by a country's
central bank or imposition of regulatory controls or taxes, to affect the
exchange rates of their currencies. The Fund may use hedging techniques with
the objective of protecting against loss through the fluctuation of the value
of foreign currencies against the U.S. dollar, particularly the forward market
in foreign exchange, currency options and currency futures. See "Currency
Exchange Transactions" and "Futures Activities" above.
Information. Many of the foreign securities held by the Fund will
not be registered with, nor the issuers thereof be subject to reporting
requirements of, the SEC. Accordingly, there may be less publicly available
information about the securities and about the foreign company or government
issuing them than is available about a domestic company or government entity.
Foreign companies are generally not subject to uniform financial reporting
standards, practices and requirements comparable to those applicable to U.S.
companies.
Political Instability. With respect to some foreign countries,
there is the possibility of expropriation or confiscatory taxation,
limitations on the removal of funds or other assets of the Fund, political or
social instability, or domestic developments which could affect U.S.
investments in those and neighboring countries.
Delays. Securities of some foreign companies are less liquid and
their prices are more volatile than securities of comparable U.S. companies.
Certain foreign countries are known to experience long delays between the
trade and settlement dates of securities
<PAGE>13
purchased or sold. Due to the increased exposure of the Fund to market and
foreign exchange fluctuations brought about by such delays, and due to the
corresponding negative impact on Fund liquidity, the Fund will avoid investing
in countries which are known to experience settlement delays which may expose
the Fund to unreasonable risk of loss.
Increased Expenses. The operating expenses of the Fund, to the
extent it invests in foreign securities, can be expected to be higher than
that of an investment company investing exclusively in U.S. securities, since
the expenses of the Fund associated with foreign investing, such as custodial
costs, valuation costs and communication costs, as well as the rate of the
investment advisory fees, though similar to such expenses of some other
international funds, are higher than those costs incurred by other investment
companies.
General. Individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency,
and balance of payments positions. The Fund may invest in securities of
foreign governments (or agencies or instrumentalities thereof), and many, if
not all, of the foregoing considerations apply to such investments as well.
Foreign Debt Securities. The returns on foreign debt securities
reflect interest rates and other market conditions prevailing in those
countries and the effect of gains and losses in the denominated currencies
against the U.S. dollar, which have had a substantial impact on investment in
foreign fixed income securities. The relative performance of various
countries' fixed income markets historically has reflected wide variations
relating to the unique characteristics of each country's economy. Year-to-
year fluctuations in certain markets have been significant, and negative
returns have been experienced in various markets from time to time.
The foreign government securities in which the Fund may invest
generally consist of obligations issued or backed by national, state or
provincial governments or similar political subdivisions or central banks in
foreign countries. Foreign government securities also include debt
obligations of supranational entities, which include international
organizations designated, or backed by governmental entities to promote
economic reconstruction or development, international banking institutions and
related government agencies. Examples include the International Bank for
Reconstruction and Development (the "World Bank"), the European Coal and Steel
Community, the Asian Development Bank and the InterAmerican Development Bank.
Foreign government securities also include debt securities of
"quasi-governmental agencies" and debt securities denominated in multinational
currency units of an issuer (including supranational issuers). Debt
securities of quasi-governmental agencies are issued by entities owned by
either a national, state or equivalent government or are obligations of a
political unit that is not backed by the national government's full faith and
credit and general taxing powers. An example of a multinational currency unit
is the
<PAGE>14
European Currency Unit ("ECU"). An ECU represents specified amounts of the
currencies of certain member states of the European Economic Community. The
specific amounts of currencies comprising the ECU may be adjusted by the
Council of Ministers of the European Community to reflect changes in relative
values of the underlying currencies.
Loan Participations and Assignments. The Fund may invest in fixed
and floating rate loans ("Loans") arranged through private negotiations
between a foreign government (a "Borrower") and one or more financial
institutions ("Lenders"). The majority of the Fund's investments in Loans are
expected to be in the form of participations in Loans ("Participations") and
assignments of portions of Loans from third parties ("Assignments").
Participations typically will result in the Fund having a contractual
relationship only with the Lender, not with the Borrower. The Fund will have
the right to receive payments of principal, interest and any fees to which it
is entitled only from the Lender selling the Participation and only upon
receipt by the Lender of the payments from the Borrower. In connection with
purchasing Participations, the Fund generally will have no right to enforce
compliance by the Borrower with the terms of the loan agreement relating to
the Loan, nor any rights of set-off against the Borrower, and the Fund may not
directly benefit from any collateral supporting the Loan in which it has
purchased the Participation. As a result, the Fund will assume the credit
risk of both the Borrower and the Lender that is selling the Participation.
In the event of the insolvency of the Lender selling a Participation, the Fund
may be treated as a general creditor of the Lender and may not benefit from
any set-off between the Lender and the Borrower. The Fund will acquire
Participations only if the Lender interpositioned between the Fund and the
Borrower is determined by Warburg to be creditworthy.
When the Fund purchases Assignments from Lenders, the Fund will
acquire direct rights against the Borrower on the Loan. However, since
Assignments are generally arranged through private negotiations between
potential assignees and potential assignors, the rights and obligations
acquired by the Fund as the purchaser of an Assignment may differ from, and be
more limited than, those held by the assigning Lender.
There are risks involved in investing in Participations and
Assignments. The Fund may have difficulty disposing of them because there is
no liquid market for such securities. The lack of a liquid secondary market
will have an adverse impact on the value of such securities and on the Fund's
ability to dispose of particular Participations or Assignments when necessary
to meet the Fund's liquidity needs or in response to a specific economic
event, such as a deterioration in the creditworthiness of the Borrower. The
lack of a liquid market for Participations and Assignments also may make it
more difficult for the Fund to assign a value to these securities for purposes
of valuing the Fund's portfolio and calculating its net asset value.
Zero Coupon Securities. The Fund may invest in "zero coupon" U.S.
Treasury, foreign government and U.S. and foreign corporate convertible and
nonconvertible debt securities, which are bills, notes and bonds that have
been stripped of their unmatured
<PAGE>15
interest coupons and custodial receipts or certificates of participation
representing interests in such stripped debt obligations and coupons. A zero
coupon security pays no interest to its holder prior to maturity.
Accordingly, such securities usually trade at a deep discount from their face
or par value and will be subject to greater fluctuations of market value in
response to changing interest rates than debt obligations of comparable
maturities that make current distributions of interest. The Fund anticipates
that it will not normally hold zero coupon securities to maturity. Federal
tax law requires that a holder of a zero coupon security accrue a portion of
the discount at which the security was purchased as income each year, even
though the holder receives no interest payment on the security during the
year. Such accrued discount will be includible in determining the amount of
dividends the Fund must pay each year and, in order to generate cash necessary
to pay such dividends, the Fund may liquidate portfolio securities at a time
when it would not otherwise have done so.
Below Investment Grade Securities. The Fund may hold up to 35% of
its net assets in fixed income securities rated below investment grade or in
comparable unrated securities considered to be of equivalent quality. While
the market values of medium- and lower-rated securities and unrated securities
of comparable quality tend to react less to fluctuations in interest rate
levels than do those of higher-rated securities, the market values of certain
of these securities also tend to be more sensitive to individual corporate
developments and changes in economic conditions than higher-quality
securities. In addition, medium- and lower-rated securities and comparable
unrated securities generally present a higher degree of credit risk. Issuers
of medium- and lower-rated securities and unrated securities are often highly
leveraged and may not have more traditional methods of financing available to
them so that their ability to service their debt obligations during an
economic downturn or during sustained periods of rising interest rates may be
impaired. The risk of loss due to default by such issuers is significantly
greater because medium- and lower-rated securities and unrated securities
generally are unsecured and frequently are subordinated to the prior payment
of senior indebtedness.
The market for medium- and lower-rated and unrated securities is
relatively new and has not weathered a major economic recession. Any such
recession could disrupt severely the market for such securities and may
adversely affect the value of such securities and the ability of the issuers
of such securities to repay principal and pay interest thereon.
The Fund may have difficulty disposing of certain of these
securities because there may be a thin trading market. Because there is no
established retail secondary market for many of these securities, the Fund
anticipates that these securities could be sold only to a limited number of
dealers or institutional investors. To the extent a secondary trading market
for these securities does exist, it generally is not as liquid as the
secondary market for higher-rated securities. The lack of a liquid secondary
market, as well as adverse publicity and investor perception with respect to
these securities, may have an adverse impact on market price and the Fund's
ability to dispose of particular issues when necessary to meet the Fund's
liquidity needs or in response to a specific economic event such as a
deterioration in the creditworthiness of the issuer. The lack of a liquid
secondary market for certain
<PAGE>16
securities also may make it more difficult for the Fund to obtain accurate
market quotations for purposes of valuing the Fund and calculating its net
asset value.
The market value of securities in lower-rated categories is more
volatile than that of higher quality securities. Factors adversely impacting
the market value of these securities will adversely impact the Fund's net
asset value. The Fund will rely on the judgment, analysis and experience of
Warburg in evaluating the creditworthiness of an issuer. In this evaluation,
Warburg will take into consideration, among other things, the issuer's
financial resources, its sensitivity to economic conditions and trends, its
operating history, the quality of the issuer's management and regulatory
matters. Normally, medium- and lower-rated and comparable unrated securities
are not intended for short-term investment. The Fund may incur additional
expenses to the extent it is required to seek recovery upon a default in the
payment of principal or interest on its portfolio holdings of such securities.
Recent adverse publicity regarding lower-rated bonds may have depressed the
prices for such securities to some extent. Whether investor perceptions will
continue to have a negative effect on the price of such securities is
uncertain.
Short Sales "Against the Box." In a short sale, the Fund sells a
borrowed security and has a corresponding obligation to the lender to return
the identical security. The seller does not immediately deliver the
securities sold and is said to have a short position in those securities until
delivery occurs. If the Fund engages in a short sale, the collateral for the
short position will be maintained by the Fund's custodian or qualified
sub-custodian. While the short sale is open, the Fund will maintain in a
segregated account an amount of securities equal in kind and amount to the
securities sold short or securities convertible into or exchangeable for such
equivalent securities. These securities constitute the Fund's long position.
The Fund does not intend to engage in short sales against the box
for investment purposes. The Fund may, however, make a short sale as a hedge,
when it believes that the price of a security may decline, causing a decline
in the value of a security owned by the Fund (or a security convertible or
exchangeable for such security), or when the Fund wants to sell the security
at an attractive current price, but also wishes to defer recognition of gain
or loss for U.S. federal income tax purposes and for purposes of satisfying
certain tests applicable to regulated investment companies under the Code. In
such case, any future losses in the Fund's long position should be offset by a
gain in the short position and, conversely, any gain in the long position
should be reduced by a loss in the short position. The extent to which such
gains or losses are reduced will depend upon the amount of the security sold
short relative to the amount the Fund owns. There will be certain additional
transaction costs associated with short sales against the box, but the Fund
will endeavor to offset these costs with the income from the investment of the
cash proceeds of short sales.
U.S. Government Securities. The Fund may invest in debt obligations
of varying maturities issued or guaranteed by the United States government,
its agencies or
<PAGE>17
instrumentalities ("U.S. Government Securities"). Direct obligations of the
U.S. Treasury include a variety of securities that differ in their interest
rates, maturities and dates of issuance. U.S. Government Securities also
include securities issued or guaranteed by the Federal Housing Administration,
Farmers Home Loan Administration, Export-Import Bank of the United States,
Small Business Administration, Government National Mortgage Association,
General Services Administration, Central Bank for Cooperatives, Federal Farm
Credit Banks, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation,
Federal Intermediate Credit Banks, Federal Land Banks, Federal National
Mortgage Association, Maritime Administration, Tennessee Valley Authority,
District of Columbia Armory Board and Student Loan Marketing Association. The
Fund may also invest in instruments that are supported by the right of the
issuer to borrow from the U.S. Treasury and instruments that are supported by
the credit of the instrumentality. Because the U.S. government is not
obligated by law to provide support to an instrumentality it sponsors, the
Fund will invest in obligations issued by such an instrumentality only if
Warburg determines that the credit risk with respect to the instrumentality
does not make its securities unsuitable for investment by the Fund.
Securities of Other Investment Companies. The Fund may invest in
securities of other investment companies to the extent permitted under the
Investment Company Act of 1940, as amended (the "1940 Act"). Presently, under
the 1940 Act, the Fund may hold securities of another investment company in
amounts which (i) do not exceed 3% of the total outstanding voting stock of
such company, (ii) do not exceed 5% of the value of the Fund's total assets
and (iii) when added to all other investment company securities held by the
Fund, do not exceed 10% of the value of the Fund's total assets.
Reverse Repurchase Agreements and Dollar Rolls. The Fund may also
enter into reverse repurchase agreements with the same parties with whom it
may enter into repurchase agreements. Reverse repurchase agreements involve
the sale of securities held by the Fund pursuant to its agreement to
repurchase them at a mutually agreed upon date, price and rate of interest.
At the time the Fund enters into a reverse repurchase agreement, it will
establish and maintain a segregated account with an approved custodian
containing cash or liquid high-grade debt securities having a value not less
than the repurchase price (including accrued interest). The assets contained
in the segregated account will be marked-to-market daily and additional assets
will be placed in such account on any day in which the assets fall below the
repurchase price (plus accrued interest). The Fund's liquidity and ability to
manage its assets might be affected when it sets aside cash or portfolio
securities to cover such commitments. Reverse repurchase agreements involve
the risk that the market value of the securities retained in lieu of sale may
decline below the price of the securities the Fund has sold but is obligated
to repurchase. In the event the buyer of securities under a reverse
repurchase agreement files for bankruptcy or becomes insolvent, such buyer or
its trustee or receiver may receive an extension of time to determine whether
to enforce a Fund's obligation to repurchase the securities, and the Fund's
use of the proceeds of the reverse repurchase agreement may effectively be
restricted pending such decision.
<PAGE>18
The Fund also may enter into "dollar rolls," in which the Fund sells
fixed-income securities for delivery in the current month and simultaneously
contracts to repurchase similar but not identical (same type, coupon and
maturity) securities on a specified future date. During the roll period, the
Fund would forego principal and interest paid on such securities. The Fund
would be compensated by the difference between the current sales price and the
forward price for the future purchase, as well as by the interest earned on
the cash proceeds of the initial sale. At the time the Fund enters into a
dollar roll transaction, it will place in a segregated account maintained with
an approved custodian cash or other liquid high-grade debt obligations having
a value not less than the repurchase price (including accrued interest) and
will subsequently monitor the account to ensure that its value is maintained.
Reverse repurchase agreements are considered to be borrowings under the 1940
Act.
When-Issued Securities and Delayed-Delivery Transactions. The Fund
may utilize up to 20% of its total assets to purchase securities on a
"when-issued" basis or purchase or sell securities for delayed delivery (i.e.,
payment or delivery occur beyond the normal settlement date at a stated price
and yield). When-issued transactions normally settle within 30-45 days. The
Fund will enter into a when-issued transaction for the purpose of acquiring
portfolio securities and not for the purpose of leverage, but may sell the
securities before the settlement date if Warburg deems it advantageous to do
so. The payment obligation and the interest rate that will be received on
when-issued securities are fixed at the time the buyer enters into the
commitment. Due to fluctuations in the value of securities purchased or sold
on a when-issued or delayed-delivery basis, the yields obtained on such
securities may be higher or lower than the yields available in the market on
the dates when the investments are actually delivered to the buyers.
When the Fund agrees to purchase when-issued or delayed-delivery
securities, its custodian will set aside cash, U.S. Government Securities or
other liquid high-grade debt obligations or other securities that are
acceptable as collateral to the appropriate regulatory authority equal to the
amount of the commitment in a segregated account. Normally, the custodian
will set aside portfolio securities to satisfy a purchase commitment, and in
such a case the Fund may be required subsequently to place additional assets
in the segregated account in order to ensure that the value of the account
remains equal to the amount of the Fund's commitment. It may be expected that
the Fund's net assets will fluctuate to a greater degree when it sets aside
portfolio securities to cover such purchase commitments than when it sets
aside cash. When the Fund engages in when-issued or delayed-delivery
transactions, it relies on the other party to consummate the trade. Failure
of the seller to do so may result in the Fund's incurring a loss or missing an
opportunity to obtain a price considered to be advantageous.
Warrants. The Fund may invest up to 5% of net assets in warrants
(valued at the lower of cost or market) (other than warrants acquired by the
Fund as part of a unit or attached to securities at the time of purchase),
provided that not more than 2% of net assets may be invested in warrants not
listed on a recognized U.S. or foreign stock exchange.
<PAGE>19
Because a warrant does not carry with it the right to dividends or voting
rights with respect to the securities which it entitles a holder to purchase,
and because it does not represent any rights in the assets of the issuer,
warrants may be considered more speculative than certain other types of
investments. Also, the value of a warrant does not necessarily change with
the value of the underlying securities and a warrant ceases to have value if
it is not exercised prior to its expiration date.
Non-Publicly Traded and Illiquid Securities. The Fund may not
invest more than 15% of its net assets, in non-publicly traded and illiquid
securities, including securities that are illiquid by virtue of the absence of
a readily available market, repurchase agreements which have a maturity of
longer than seven days and time deposits maturing in more than seven days.
Securities that have legal or contractual restrictions on resale but have a
readily available market are not considered illiquid for purposes of this
limitation. Repurchase agreements subject to demand are deemed to have a
maturity equal to the notice period.
Historically, illiquid securities have included securities subject
to contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933, as amended (the "Securities
Act"), securities which are otherwise not readily marketable and repurchase
agreements having a maturity of longer than seven days. Securities which have
not been registered under the Securities Act are referred to as private
placements or restricted securities and are purchased directly from the issuer
or in the secondary market. Mutual funds do not typically hold a significant
amount of these restricted or other illiquid securities because of the
potential for delays on resale and uncertainty in valuation. Limitations on
resale may have an adverse effect on the marketability of portfolio securities
and a mutual fund might be unable to dispose of restricted or other illiquid
securities promptly or at reasonable prices and might thereby experience
difficulty satisfying redemptions within seven days. A mutual fund might also
have to register such restricted securities in order to dispose of them
resulting in additional expense and delay. Adverse market conditions could
impede such a public offering of securities.
In recent years, however, a large institutional market has developed
for certain securities that are not registered under the Securities Act
including repurchase agreements, commercial paper, foreign securities,
municipal securities and corporate bonds and notes. Institutional investors
depend on an efficient institutional market in which the unregistered security
can be readily resold or on an issuer's ability to honor a demand for
repayment. The fact that there are contractual or legal restrictions on
resale to the general public or to certain institutions may not be indicative
of the liquidity of such investments.
Rule 144A Securities. Rule 144A under the Securities Act adopted
by the SEC allows for a broader institutional trading market for securities
otherwise subject to restriction on resale to the general public. Rule 144A
establishes a "safe harbor" from the registration requirements of the
Securities Act for resales of certain securities to qualified institutional
buyers. Warburg anticipates that the market for certain restricted securities
such
<PAGE>20
as institutional commercial paper will expand further as a result of this
regulation and use of automated systems for the trading, clearance and
settlement of unregistered securities of domestic and foreign issuers, such as
the PORTAL System sponsored by the National Association of Securities Dealers,
Inc.
An investment in Rule 144A Securities will be considered illiquid
and therefore subject to the Fund's limit on the purchase of illiquid
securities unless the Fund's Board of Directors (the "Board") or its delegates
determines that the Rule 144A Securities are liquid. In reaching liquidity
decisions, the Board or its delegates may consider, inter alia, the following
factors: (i) the unregistered nature of the security; (ii) the frequency of
trades and quotes for the security; (iii) the number of dealers wishing to
purchase or sell the security and the number of other potential purchasers;
(iv) dealer undertakings to make a market in the security and (v) the nature
of the security and the nature of the marketplace trades (e.g., the time
needed to dispose of the security, the method of soliciting offers and the
mechanics of the transfer).
Borrowing. The Fund may borrow up to 30% of its total assets for
temporary or emergency purposes, including to meet portfolio redemption
requests so as to permit the orderly disposition of portfolio securities or to
facilitate settlement transactions on portfolio securities. Investments
(including roll-overs) will not be made when borrowings exceed 5% of the
Fund's net assets. Although the principal of such borrowings will be fixed,
the Fund's assets may change in value during the time the borrowing is
outstanding. The Fund expects that some of its borrowings may be made on a
secured basis. In such situations, either the custodian will segregate the
pledged assets for the benefit of the lender or arrangements will be made with
a suitable subcustodian, which may include the lender.
Non-Diversified Status. The Fund is classified as non-diversified
within the meaning of the 1940 Act, which means that it is not limited by such
Act in the proportion of its assets that it may invest in securities of a
single issuer. The Fund's investments will be limited, however, in order to
qualify as a "regulated investment company" for purposes of the Code. See
"Additional Information Concerning Taxes." To qualify, the Fund will comply
with certain requirements, including limiting its investments so that at the
close of each quarter of the taxable year (i) not more than 25% of the market
value of its total assets will be invested in the securities of a single
issuer, and (ii) with respect to 50% of the market value of its total assets,
not more than 5% of the market value of its total assets will be invested in
the securities of a single issuer and the Fund will not own more than 10% of
the outstanding voting securities of a single issuer.
Other Investment Limitations
The investment limitations numbered 1 through 10 may not be changed
without the affirmative vote of the holders of a majority of the Fund's
outstanding shares. Such majority is defined as the lesser of (i) 67% or more
of the shares present at the meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or
<PAGE>21
represented by proxy, or (ii) more than 50% of the outstanding shares.
Investment limitations 11 through 16 may be changed by a vote of the Board at
any time.
The Fund may not:
1. Borrow money except that the Fund may (a) borrow from banks for
temporary or emergency purposes and (b) enter into reverse repurchase
agreements; provided that reverse repurchase agreements, dollar roll
transactions that are accounted for as financings and any other transactions
constituting borrowing by the Fund may not exceed 30% of the value of the
Fund's total assets. For purposes of this restriction, short sales, the entry
into currency transactions, options, futures contracts, options on futures
contracts, forward commitment transactions and dollar roll transactions that
are not accounted for as financings (and the segregation of assets in
connection with any of the foregoing) shall not constitute borrowing.
2. Purchase any securities which would cause 25% or more of the
value of the Fund's total assets at the time of purchase to be invested in the
securities of issuers conducting their principal business activities in the
same industry; provided that there shall be no limit on the purchase of U.S.
government securities.
3. Make loans, except that the Fund may purchase or hold
fixed-income securities, including loan participations and assignments and
structured securities; lend portfolio securities; and enter into repurchase
agreements.
4. Underwrite any securities issued by others except to the extent
that the investment in restricted securities and the sale of securities in
accordance with the Fund's investment objective, policies and limitations may
be deemed to be underwriting.
5. Purchase or sell real estate or invest in real estate limited
partnerships, oil, gas or mineral exploration or development programs or oil,
gas and mineral leases, except that the Fund may invest in (a) securities
secured by real estate, mortgages or interests therein and (b) securities of
companies that invest in or sponsor oil, gas or mineral exploration or
development programs.
6. Make short sales of securities or maintain a short position,
except the Fund may maintain short positions in forward currency contracts,
options, futures contracts and options on futures contracts and make short
sales "against the box."
7. Purchase securities on margin, except that the Fund may obtain
any short-term credits necessary for the clearance of purchases and sales of
securities. For purposes of this restriction, the deposit or payment of
initial or variation margin in connection with transactions in currencies,
options, futures contracts or related options will not be deemed to be a
purchase of securities on margin.
<PAGE>22
8. Invest in commodities, except that the Fund may purchase and
sell futures contracts, including those relating to securities, currencies and
indexes, and options on futures contracts, securities, currencies or indexes,
and purchase and sell currencies or securities on a forward commitment or
delayed-delivery basis.
9. Issue any senior security except as permitted in these
Investment Restrictions.
10. Purchase securities of other investment companies except in
connection with a merger, consolidation, acquisition, reorganization or offer
of exchange, or as otherwise permitted under the 1940 Act.
11. Pledge, mortgage or hypothecate its assets, except to the
extent necessary to secure permitted borrowings and to the extent related to
the deposit of assets in escrow in connection with the writing of covered put
and call options and purchase of securities on a forward commitment or
delayed-delivery basis and collateral and initial or variation margin
arrangements with respect to currency transactions, options, futures
contracts, and options on futures contracts.
12. Invest more than 15% of the value of the Fund's net assets in
securities which may be illiquid because of legal or contractual restrictions
on resale or securities for which there are no readily available market
quotations. For purposes of this limitation, repurchase agreements with
maturities greater than seven days shall be considered illiquid securities.
13. Purchase any security if as a result the Fund would then have
more than 5% of its total assets invested in securities of companies
(including predecessors) that have been in continuous operation for fewer than
three years.
14. Purchase or retain securities of any company if, to the
knowledge of the Fund, any of the Fund's officers or Directors or any officer
or director of Warburg individually owns more than 1/2 of 1% of the
outstanding securities of such company and together they own beneficially more
than 5% of the securities.
15. Invest in warrants (other than warrants acquired by the Fund as
part of a unit or attached to securities at the time of purchase) if, as a
result, the investments (valued at the lower of cost or market) would exceed
5% of the value of the Fund's net assets of which not more than 2% of the
Fund's net assets may be invested in warrants not listed on a recognized U.S.
or foreign stock exchange.
16. Make additional investments (including roll-overs) if the
Fund's borrowings exceed 5% of its net assets.
<PAGE>23
The aggregate of all Rule 144A Securities, non-publicly traded and
illiquid securities and securities of companies (including predecessors) that
have been in continuous operation for less than three years is limited to 15%
of total assets. These and other non-fundamental investment limitations are
currently required by one or more states in which shares of the Fund are sold.
These may be more restrictive than the limitations set forth above. Should
the Fund determine that any such commitment is no longer in the best interest
of the Fund and its shareholders, the Fund will revoke the commitment by
terminating the sale of Fund shares in the state involved. In addition, the
relevant state may change or eliminate its policy regarding such investment
limitations.
If a percentage restriction (other than the percentage limitation
set forth in No. 1 above) is adhered to at the time of an investment, a later
increase or decrease in the percentage of assets resulting from a change in
the values of portfolio securities or in the amount of the Fund's assets will
not constitute a violation of such restriction.
Portfolio Valuation
The Prospectuses discuss the time at which the net asset value of
the Fund is determined for purposes of sales and redemptions. The following
is a description of the procedures used by the Fund in valuing its assets.
Securities listed on a U.S. securities exchange (including
securities traded through the NASDAQ National Market System) or foreign
securities exchange or traded in an over-the-counter market will be valued at
the most recent sale as of the time the valuation is made or, in the absence
of sales, at the mean between the bid and asked quotations. If there are no
such quotations, the value of the securities will be taken to be the highest
bid quotation on the exchange or market. Options or futures contracts will be
valued similarly. A security which is listed or traded on more than one
exchange is valued at the quotation on the exchange determined to be the
primary market for such security. Notwithstanding the foregoing, in
determining the market value of portfolio investments, the Fund may employ
outside organizations (a "Pricing Service") which may use a matrix, formula or
other objective method that takes into consideration market indexes, matrices,
yield curves and other specific adjustments. The procedures of Pricing
Services are reviewed periodically by the officers of the Fund under the
general supervision and responsibility of the Board, which may replace a
Pricing Service at any time. Short-term obligations with maturities of 60
days or less are valued at amortized cost, which constitutes fair value as
determined by the Board. Amortized cost involves valuing a portfolio
instrument at its initial cost and thereafter assuming a constant amortization
to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument. The
amortized cost method of valuation may also be used with respect to other debt
obligations with 60 days or less remaining to maturity. All other securities
and other assets of the Fund will be valued at their fair value as determined
in good faith pursuant to consistently applied procedures established by the
Board. In addition, the Board or its delegates may value a
<PAGE>24
security at fair value if it determines that such security's value determined
by the methodology set forth above does not reflect its fair value.
Trading in securities in certain foreign countries is completed at
various times prior to the close of business on each business day in New York
(i.e., a day on which the New York Stock Exchange (the "NYSE") is open for
trading). In addition, securities trading in a particular country or
countries may not take place on all business days in New York. Furthermore,
trading takes place in various foreign markets on days which are not business
days in New York and days on which the Fund's net asset value is not
calculated. As a result, calculation of the Fund's net asset value may not
take place contemporaneously with the determination of the prices of certain
portfolio securities used in such calculation. Events affecting the values of
portfolio securities that occur between the time their prices are determined
and the close of regular trading on the NYSE will not be reflected in the
Fund's calculation of net asset value unless the Board or its delegates deems
that the particular event would materially affect net asset value, in which
case an adjustment may be made. All assets and liabilities initially
expressed in foreign currency values will be converted into U.S. dollar values
at the prevailing rate as quoted by a Pricing Service. If such quotations are
not available, the rate of exchange will be determined in good faith pursuant
to consistently applied procedures established by the Board.
Portfolio Transactions
Warburg is responsible for establishing, reviewing and, where
necessary, modifying the Fund's investment program to achieve its investment
objective. Purchases and sales of newly issued portfolio securities are
usually principal transactions without brokerage commissions effected directly
with the issuer or with an underwriter acting as principal. Other purchases
and sales may be effected on a securities exchange or over-the-counter,
depending on where it appears that the best price or execution will be
obtained. The purchase price paid by the Fund to underwriters of newly issued
securities usually includes a concession paid by the issuer to the
underwriter, and purchases of securities from dealers, acting as either
principals or agents in the after market, are normally executed at a price
between the bid and asked price, which includes a dealer's mark-up or
mark-down. Transactions on U.S. stock exchanges and some foreign stock
exchanges involve the payment of negotiated brokerage commissions. On
exchanges on which commissions are negotiated, the cost of transactions may
vary among different brokers. On most foreign exchanges, commissions are
generally fixed. There is generally no stated commission in the case of
securities traded in domestic or foreign over-the-counter markets, but the
price of securities traded in over-the-counter markets includes an undisclosed
commission or mark-up. U.S. Government Securities are generally purchased
from underwriters or dealers, although certain newly issued U.S. Government
Securities may be purchased directly from the U.S. Treasury or from the
issuing agency or instrumentality.
Warburg will select specific portfolio investments and effect
transactions for the Fund and in doing so seeks to obtain the overall best
execution of portfolio transactions.
<PAGE>25
In evaluating prices and executions, Warburg will consider the factors it
deems relevant, which may include the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
a broker or dealer and the reasonableness of the commission, if any, for the
specific transaction and on a continuing basis. Warburg may, in its
discretion, effect transactions in portfolio securities with dealers who
provide brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Fund and/or other
accounts over which Warburg exercises investment discretion. Warburg may
place portfolio transactions with a broker or dealer with whom it has
negotiated a commission that is in excess of the commission another broker or
dealer would have charged for effecting the transaction if Warburg determines
in good faith that such amount of commission was reasonable in relation to the
value of such brokerage and research services provided by such broker or
dealer viewed in terms of either that particular transaction or of the overall
responsibilities of Warburg. Research and other services received may be
useful to Warburg in serving both the Fund and its other clients and,
conversely, research or other services obtained by the placement of business
of other clients may be useful to Warburg in carrying out its obligations to
the Fund. Research may include furnishing advice, either directly or through
publications or writings, as to the value of securities, the advisability of
purchasing or selling specific securities and the availability of securities
or purchasers or sellers of securities; furnishing seminars, information,
analyses and reports concerning issuers, industries, securities, trading
markets and methods, legislative developments, changes in accounting
practices, economic factors and trends and portfolio strategy; access to
research analysts, corporate management personnel, industry experts,
economists and government officials; comparative performance evaluation and
technical measurement services and quotation services; and products and other
services (such as third party publications, reports and analyses, and computer
and electronic access, equipment, software, information and accessories that
deliver, process or otherwise utilize information, including the research
described above) that assist Warburg in carrying out its responsibilities.
Research received from brokers or dealers is supplemental to Warburg's own
research program. The fees to Warburg under its advisory agreements with the
Fund are not reduced by reason of its receiving any brokerage and research
services.
During the fiscal years ended October 31, 1993 and October 31, 1994,
the Fund paid an aggregate of approximately $9,637 and $11,288, respectively,
in commissions to broker-dealers for execution of portfolio transactions. The
Fund did not pay any such commissions in the fiscal year ended October 31,
1995.
Investment decisions for the Fund concerning specific portfolio
securities are made independently from those for other clients advised by
Warburg. Such other investment clients may invest in the same securities as
the Fund. When purchases or sales of the same security are made at
substantially the same time on behalf of such other clients, transactions are
averaged as to price and available investments allocated as to amount, in a
manner which Warburg believes to be equitable to each client, including the
Fund. In some instances, this investment procedure may adversely affect the
price paid or received by the Fund or the size of the position obtained or
sold for the Fund. To the extent permitted by law, Warburg may
<PAGE>26
aggregate the securities to be sold or purchased for the Fund with those to be
sold or purchased for such other investment clients in order to obtain best
execution.
Any portfolio transaction for the Fund may be executed through
Counsellors Securities Inc., the Fund's distributor ("Counsellors
Securities"), if, in Warburg's judgment, the use of Counsellors Securities is
likely to result in price and execution at least as favorable as those of
other qualified brokers, and if, in the transaction, Counsellors Securities
charges the Fund a commission rate consistent with those charged by
Counsellors Securities to comparable unaffiliated customers in similar
transactions. All transactions with affiliated brokers will comply with Rule
17e-1 under the 1940 Act. No portfolio securities have been executed through
Counsellors Securities since the commencement of the Fund's operations.
In no instance will portfolio securities be purchased from or sold
to Warburg or Counsellors Securities or any affiliated person of such
companies. In addition, the Fund will not give preference to any institutions
with whom the Fund enters into distribution or shareholder servicing
agreements concerning the provision of distribution services or support
services. See the Prospectuses, "Shareholder Servicing."
Transactions for the Fund may be effected on foreign securities
exchanges. In transactions for securities not actively traded on a foreign
securities exchange, the Fund will deal directly with the dealers who make a
market in the securities involved, except in those circumstances where better
prices and execution are available elsewhere. Such dealers usually are acting
as principal for their own account. On occasion, securities may be purchased
directly from the issuer. Such portfolio securities are generally traded on a
net basis and do not normally involve brokerage commissions. Securities firms
may receive brokerage commissions on certain portfolio transactions, including
options, futures and options on futures transactions and the purchase and sale
of underlying securities upon exercise of options.
The Fund may participate, if and when practicable, in bidding for
the purchase of securities for the Fund's portfolio directly from an issuer in
order to take advantage of the lower purchase price available to members of
such a group. The Fund will engage in this practice, however, only when
Warburg, in its sole discretion, believes such practice to be otherwise in the
Fund's interest.
Portfolio Turnover
The Fund's portfolio turnover rate is calculated by dividing the
lesser of purchases or sales of its portfolio securities for the year by the
monthly average value of the portfolio securities. Securities with remaining
maturities of one year or less at the date of acquisition are excluded from
the calculation.
The Fund does not intend to seek profits through short-term trading,
but the rate of turnover will not be a limiting factor when the Fund deems it
desirable to sell or
<PAGE>27
purchase securities. Certain practices that may be employed by the Fund could
result in high portfolio turnover. For example, portfolio securities may be
sold in anticipation of a rise in interest rates (market decline) or purchased
in anticipation of a decline in interest rates (market rise) and later sold.
In addition, a security may be sold and another of comparable quality
purchased at approximately the same time to take advantage of what Warburg
believes to be a temporary disparity in the normal yield relationship between
the two securities. These yield disparities may occur for reasons not
directly related to the investment quality of particular issues or the general
movement of interest rates, such as changes in the overall demand for, or
supply of, various types of securities. In addition, options on securities
may be sold in anticipation of a decline in the price of the underlying
security (market decline) or purchased in anticipation of a rise in the price
of the underlying security (market rise) and later sold.
MANAGEMENT OF THE FUND
Officers and Board of Directors
The names (and ages) of the Fund's Directors and officers, their
addresses, present positions and principal occupations during the past five
years and other affiliations are set forth below.
Richard N. Cooper (61) . . . . . Director
Room 7E47OHB National Intelligence Counsel;
Central Intelligence Agency Professor at Harvard University;
930 Dolly Madison Blvd. Director or Trustee of Circuit City
McClain, Virginia 22107 Stores, Inc. (retail electronics and
appliances) and Phoenix Home Life
Insurance Co.
Donald J. Donahue (71) . . . . . Director
99 Indian Field Road Chairman of Magma Copper Company since
Greenwich, Connecticut 06830 January 1987; Director or Trustee of GEV
Corporation and Signet Star Reinsurance
Company; Chairman and Director of NAC
Holdings from September 1990-June 1993.
Jack W. Fritz (68) . . . . . . . Director
2425 North Fish Creek Road Private investor; Consultant and
P.O. Box 483 Director of Fritz Broadcasting, Inc. and
Wilson, Wyoming 83014 Fritz Communications (developers and
operators of radio stations); Director of
Advo, Inc. (direct mail advertising).
<PAGE>28
John L. Furth* (65) . . . . . Chairman of the Board and President
466 Lexington Avenue Vice Chairman and Director of E.M.
New York, New York 10017-3147 Warburg, Pincus & Co., Inc. ("EMW");
Associated with EMW since 1970; Director
and officer of other investment companies
advised by Warburg.
Thomas A. Melfe (63) . . . . . . Director
30 Rockefeller Plaza Partner in the law firm of Donovan
New York, New York 10112 Leisure Newton & Irvine; Director of
Municipal Fund for New York Investors, Inc.
Alexander B. Trowbridge (66) . . Director
1155 Connecticut Avenue, N.W. President of Trowbridge Partners, Inc.
Suite 700 (business consulting) from January 1990-
Washington, DC 20036 January 1994; President of the National
Association of Manufacturers from
1980-1990; Director or Trustee of New
England Mutual Life Insurance Co., ICOS
Corporation (biopharmaceuticals), P.H.H.
Corporation (fleet auto management; housing
and plant relocation service), WMX
Technologies Inc. (solid and hazardous
waste collection and disposal), The Rouse
Company (real estate development),
SunResorts International Ltd. (hotel and
real estate management), Harris Corp.
(electronics and communications equipment),
The Gillette Co. (personal care products)
and Sun Company Inc. (petroleum refining
and marketing).
Dale C. Christensen (48) . . . . President and Co-Portfolio Manager of the
466 Lexington Avenue Fund
New York, New York 10017-3147 Portfolio Manager or Co-Portfolio
Manager of other Warburg Pincus Funds;
Managing Director of EMW; Associated with
EMW since 1989; Vice President at
Citibank, N.A. from 1985-1989; President
of other investment companies advised by
Warburg.
- ------------------------
* Indicates a Director who is an "interested person" of the Fund as defined
in the 1940 Act.
<PAGE>29
Arnold M. Reichman (47) . . . . . Executive Vice President
466 Lexington Avenue Managing Director and Assistant Secretary
New York, New York 10017-3147 of EMW; Associated with EMW since 1984;
Senior Vice President, Secretary and Chief
Operating Officer of Counsellors
Securities; Officer of other investment
companies advised by Warburg.
Eugene L. Podsiadlo (38) . . . . Senior Vice President
466 Lexington Avenue Managing Director of EMW; Associated
New York, New York 10017-3147 with EMW since 1991; Vice President of
Citibank, N.A. from 1987-1991; Senior Vice
President of Counsellors Securities and
officer of other investment companies
advised by Warburg.
Stephen Distler (42) . . . . . . Vice President and Chief Financial
466 Lexington Avenue Officer
New York, New York 10017-3147 Managing Director, Controller and Assistant
Secretary of EMW; Associated with EMW since
1984; Treasurer of Counsellors Securities;
Officer of other investment companies
advised by Warburg.
Eugene P. Grace (44) . . . . . . Vice President and Secretary
466 Lexington Avenue Associated with EMW since April 1994;
New York, New York 10017-3147 Attorney-at-law from September 1989-April
1994; life insurance agent, New York Life
Insurance Company from 1993-1994; General
Counsel and Secretary, Home Unity Savings
Bank from 1991-1992; Vice President and
Chief Compliance Officer of Counsellors
Securities; Vice President and Secretary of
other investment companies advised by
Warburg.
Howard Conroy (41) . . . . . . . . Vice President, Treasurer and Chief
466 Lexington Avenue Accounting Officer
New York, New York 10017-3147 Associated with EMW since 1992;
Associated with Martin Geller, C.P.A. from
1990-1992; Vice President, Finance with
Gabelli/Rosenthal & Partners, L.P. until
1990; Vice President, Treasurer and Chief
Accounting Officer of other investment
companies advised by Warburg.
<PAGE>30
Karen Amato (32) . . . . . . . . Assistant Secretary
466 Lexington Avenue Associated with EMW since 1987;
New York, New York 10017-3147 Assistant Secretary of other investment
companies advised by Warburg.
No employee of Warburg or PFPC Inc., the Fund's co-administrator
("PFPC"), or any of their affiliates receives any compensation from the Fund
for acting as an officer or director of the Fund. Each Director who is not a
director, trustee, officer or employee of Warburg, PFPC or any of their
affiliates receives an annual fee of $1,000, and $250 for each meeting of the
Board attended by him for his services as Director and is reimbursed for
expenses incurred in connection with his attendance at Board meetings.
Directors' Compensation
(for the fiscal year ended October 31, 1995)
<TABLE>
<CAPTION>
Total Compensation from all
Total Compensation Investment Companies Managed
Name of Director from Fund by Warburg*
---------------- ------------------ ----------------------------
<S> <C> <C>
John L. Furth None** None**
Richard N. Cooper $2,000 $41,083
Donald J. Donahue $2,250 $43,833
Jack W. Fritz $1,750 $35,333
Thomas A. Melfe $2,250 $43,583
Alexander B. Trowbridge $2,250 $43,833
</TABLE>
- ------------------------
* Each Director also serves as a Director or Trustee of 15 other investment
companies advised by Warburg.
** Mr. Furth is considered to be an interested person of the Fund and
Warburg, as defined under Section 2(a)(19) of the 1940 Act, and,
accordingly, receives no compensation from the Fund or any other
investment company managed by Warburg.
Mr. Dale C. Christensen, president and co-portfolio manager of the
Fund, earned a B.S. in Agriculture from the University of Alberta and a B.Ed
in Mathematics from the University of Calgary, both located in Canada. Mr.
Christensen is also co-portfolio manager of Warburg Pincus Fixed Income Fund,
Warburg Pincus Intermediate Maturity Government Fund and Warburg Pincus New
York Intermediate Municipal Fund. Mr. Christensen directs the fixed income
group at Warburg, which he joined in 1989, providing portfolio management for
Warburg Pincus Funds and institutional clients around the world.
<PAGE>31
Mr. Christensen was a vice president in the International Private Banking
division and the domestic pension fund management division at Citicorp from
1984 to 1989. Prior to that, Mr. Christensen was a fixed income portfolio
manager at CIC Asset Management from 1982 to 1984.
Mr. Laxmi C. Bhandari, co-portfolio manager of the Fund, earned a
Ph.D in Finance and a M.B.A. from the University of Chicago, his P.G.D.M.
degree (M.B.A. equivalent) from the Indian Institute of Management, Ahmedabad,
India and B.Com. degree from Rajasthan University, India. He has been with
the Fund since joining EMW in 1993, specializing in derivative-based products.
Mr. Bhandari was a vice president in charge of Arbitrage Trading at the
Paribas Corporation from 1991 to 1993. Prior to that Mr. Bhandari was a vice
president of Asset Liability Management at Chemical Bank from 1987 to 1991 and
an assistant professor of Advanced Portfolio Management and Advanced Corporate
Finance at the University of Alberta from 1982 to 1987.
As of December 28, 1995, Directors and officers of the Fund as a
group owned of record less than 1% of the Fund's outstanding Common Shares.
As of the same date, Mr. Furth may be deemed to have beneficially owned 41.79%
of the Fund's outstanding Common Shares, including shares owned by clients for
which Warburg has investment discretion. Mr. Furth disclaims ownership of
these shares and does not intend to exercise voting rights with respect to
these shares. No Directors or officers owned of record any Advisor Shares.
Investment Adviser and Co-Administrators
Warburg serves as investment adviser to the Fund, Counsellors Funds
Service, Inc. ("Counsellors Service") serves as a co-administrator to the Fund
and PFPC serves as a co-administrator to the Fund pursuant to separate written
agreements (the "Advisory Agreement," the "Counsellors Service Co-
Administration Agreement" and the "PFPC Co-Administration Agreement,"
respectively). The services provided by, and the fees payable by the Fund to,
Warburg under the Advisory Agreement, Counsellors Service under the
Counsellors Service Co-Administration Agreement and PFPC under the PFPC Co-
Administration Agreement are described in the Prospectuses. Prior to March 1,
1994, PFPC served as administrator to the Fund and Counsellors Service served
as administrative services agent to the Fund pursuant to separate written
agreements.
Warburg agrees that if, in any fiscal year, the expenses borne by
the Fund exceed the applicable expense limitations imposed by the securities
regulations of any state in which shares of the Fund are registered or
qualified for sale to the public, it will reimburse the Fund to the extent
required by such regulations. Unless otherwise required by law, such
reimbursement would be accrued and paid on a monthly basis. At the date of
this Statement of Additional Information, the most restrictive annual expense
limitation applicable to the Fund is 2.5% of the first $30 million of the
average net assets of the Fund, 2% of the next
<PAGE>32
$70 million of the average net assets of the Fund and 1.5% of the remaining
average net assets of the Fund.
During the fiscal years ended October 31, 1993, October 31, 1994,
and October 31, 1995, Warburg earned $289,161, $834,884 and $773,318,
respectively, and waived $283,419, $492,915 and $435,848, respectively, in
investment advisory fees. During the fiscal year ended October 31, 1993,
Warburg reimbursed the Fund for $134,982 in expenses. During the fiscal years
ended October 31, 1993, October 31, 1994, and October 31, 1995, PFPC earned
$66,625, $105,872 and $92,798, respectively, in administration or, in the case
of the most recent fiscal year, co-administration fees. During the fiscal
years ended October 31, 1994 and October 31, 1995, PFPC waived $52,936 and
$49,312, respectively, in such fees. During the fiscal years ended October
31, 1993, October 31, 1994, and October 31, 1995, Counsellors Service earned
$14,339, $69,888 and $77,332, respectively, in administrative services fees,
or in the case of the most recent fiscal year, co-administration fees.
Custodians and Transfer Agent
Fiduciary Trust Company International ("Fiduciary") is custodian of
the Fund's assets pursuant to a custodian agreement (the "Custodian
Agreement"). Under the Custodian Agreement, Fiduciary (i) maintains a
separate account or accounts in the name of the Fund, (ii) holds and transfers
portfolio securities on account of the Fund, (iii) makes receipts and
disbursements of money on behalf of the Fund, (iv) collects and receives all
income and other payments and distributions on account of the Fund's portfolio
securities and (v) makes periodic reports to the Board concerning the Fund's
custodial arrangements. Fiduciary is authorized to select one or more foreign
or domestic banks or trust companies and securities depositories to serve as
sub-custodian on behalf of the Fund. The principal business address of
Fiduciary is Two World Trade Center, New York, New York 10048.
PNC Bank, National Association ("PNC") also provides certain
custodial services generally in connection with purchases and sales of Fund
shares. PNC is an indirect, wholly owned subsidiary of PNC Bank Corp., and
its principal business address is Broad and Chestnut Streets, Philadelphia,
Pennsylvania 19101.
State Street Bank and Trust Company ("State Street") serves as the
shareholder servicing, transfer and dividend disbursing agent of the Fund
pursuant to a Transfer Agency and Service Agreement, under which State Street
(i) issues and redeems shares of the Fund, (ii) addresses and mails all
communications by the Fund to record owners of Fund shares, including reports
to shareholders, dividend and distribution notices and proxy material for its
meetings of shareholders, (iii) maintains shareholder accounts and, if
requested, sub-accounts and (iv) makes periodic reports to the Board
concerning the transfer agent's operations with respect to the Fund. State
Street has delegated to Boston Financial Data Services, Inc., a 50% owned
subsidiary ("BFDS"), responsibility for most shareholder servicing functions.
BFDS's principal business address is 2 Heritage Drive, Boston, Massachusetts
02171.
<PAGE>33
Organization of the Fund
The Fund's charter authorizes the Board to issue three billion full
and fractional shares of common stock, $.001 par value per share ("Common
Shares"), of which one billion shares are designated Common Stock - Series 1
and one billion shares are designated Common Stock - Series 2 (the "Advisor
Shares"). Only Common Shares and Advisor Shares have been issued by the Fund.
All shareholders of the Fund in each class, upon liquidation, will
participate ratably in the Fund's net assets. Shares do not have cumulative
voting rights, which means that holders of more than 50% of the shares voting
for the election of Directors can elect all Directors. Shares are
transferable but have no preemptive, conversion or subscription rights.
Distribution and Shareholder Servicing
The Fund may, in the future, enter into agreements ("Agreements")
with institutional shareholders of record, broker-dealers, financial
institutions, depository institutions, retirement plans and financial
intermediaries ("Institutions") to provide certain distribution, shareholder
servicing, administrative and/or accounting services for their clients or
customers (or participants in the case of retirement plans) ("Customers") who
are beneficial owners of Advisor Shares. See the Advisor Prospectus,
"Shareholder Servicing." Agreements will be governed by a distribution plan
(the "Distribution Plan") pursuant to Rule 12b-1 under the 1940 Act. The
Distribution Plan requires the Board, at least quarterly, to receive and
review written reports of amounts expended under the Distribution Plan and the
purposes for which such expenditures were made.
An Institution with which the Fund has entered into an Agreement may
charge a Customer one or more of the following types of fees, as agreed upon
by the Institution and the Customer, with respect to the cash management or
other services provided by the Institution: (i) account fees (a fixed amount
per month or per year); (ii) transaction fees (a fixed amount per transaction
processed); (iii) compensation balance requirements (a minimum dollar amount a
Customer must maintain in order to obtain the services offered); or (iv)
account maintenance fees (a periodic charge based upon the percentage of
assets in the account or of the dividend paid on those assets). Services
provided by an Institution to Customers are in addition to, and not
duplicative of, the services to be provided under the Fund's co-administration
and distribution arrangements. A Customer of an Institution should read the
relevant Prospectus and Statement of Additional Information in conjunction
with the Agreement and other literature describing the services and related
fees that would be provided by the Institution to its Customers prior to any
purchase of Fund shares. Prospectuses are available from the Fund's
distributor upon request. No preference will be shown in the selection of
Fund portfolio investments for the instruments of Institutions.
The Distribution Plan will continue in effect for so long as its
continuance is specifically approved at least annually by the Board, including
a majority of the Directors
<PAGE>34
who are not interested persons of the Fund and who have no direct or indirect
financial interest in the operation of the Distribution Plan ("Independent
Directors"). Any material amendment of the Distribution Plan would require
the approval of the Board in the same manner. The Distribution Plan may not
be amended to increase materially the amount to be spent under it without
shareholder approval of the Advisor Shares. The Distribution Plan may be
terminated at any time, without penalty, by vote of a majority of the
Independent Directors or by a vote of a majority of the outstanding voting
securities of the Advisor Shares of the Fund.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The offering price of the Fund's shares is equal to the per share
net asset value of the relevant class of shares of the Fund. Information on
how to purchase and redeem Fund shares and how such shares are priced is
included in the Prospectuses under "Net Asset Value."
Under the 1940 Act, the Fund may suspend the right of redemption or
postpone the date of payment upon redemption for any period during which the
NYSE is closed, other than customary weekend and holiday closings, or during
which trading on the NYSE is restricted, or during which (as determined by the
SEC) an emergency exists as a result of which disposal or fair valuation of
portfolio securities is not reasonably practicable, or for such other periods
as the SEC may permit. (The Fund may also suspend or postpone the recordation
of an exchange of its shares upon the occurrence of any of the foregoing
conditions.)
If the Board determines that conditions exist which make payment of
redemption proceeds wholly in cash unwise or undesirable, the Fund may make
payment wholly or partly in securities or other investment instruments which
may not constitute securities as such term is defined in the applicable
securities laws. If a redemption is paid wholly or partly in securities or
other property, a shareholder would incur transaction costs in disposing of
the redemption proceeds. The Fund intends to comply with Rule 18f-1
promulgated under the 1940 Act with respect to redemptions in kind.
Automatic Cash Withdrawal Plan. An automatic cash withdrawal plan
(the "Plan") is available to shareholders who wish to receive specific amounts
of cash periodically. Withdrawals may be made under the Plan by redeeming as
many shares of the Fund as may be necessary to cover the stipulated withdrawal
payment. To the extent that withdrawals exceed dividends, distributions and
appreciation of a shareholder's investment in the Fund, there will be a
reduction in the value of the shareholder's investment and continued
withdrawal payments may reduce the shareholder's investment and ultimately
exhaust it. Withdrawal payments should not be considered as income from
investment in the Fund. All dividends and distributions on shares in the Plan
are automatically reinvested at net asset value in additional shares of the
Fund.
<PAGE>35
EXCHANGE PRIVILEGE
An exchange privilege with certain other funds advised by Warburg is
available to investors in the Fund. The funds into which exchanges of Common
Shares currently can be made are listed in the Common Share Prospectus.
Exchanges may also be made between certain Warburg Pincus Advisor Funds.
The exchange privilege enables shareholders to acquire shares in a
fund with a different investment objective when they believe that a shift
between funds is an appropriate investment decision. This privilege is
available to shareholders residing in any state in which the Common Shares or
Advisor Shares being acquired, as relevant, may legally be sold. Prior to any
exchange, the investor should obtain and review a copy of the current
prospectus of the relevant class of each fund into which an exchange is being
considered. Shareholders may obtain a prospectus of the relevant class of the
fund into which they are contemplating an exchange from Counsellors
Securities.
Upon receipt of proper instructions and all necessary supporting
documents, shares submitted for exchange are redeemed at the then-current net
asset value of the relevant class and the proceeds are invested on the same
day, at a price as described above, in shares of the relevant class of the
fund being acquired. Warburg reserves the right to reject more than three
exchange requests by a shareholder in any 30-day period. The exchange
privilege may be modified or terminated at any time upon 60 days' notice to
shareholders.
ADDITIONAL INFORMATION CONCERNING TAXES
The discussion set out below of tax considerations generally
affecting the Fund and its shareholders is intended to be only a summary and
is not intended as a substitute for careful tax planning by prospective
shareholders. Shareholders are advised to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the
Fund.
The Fund has qualified and intends to continue to qualify each year
as a "regulated investment company" under Subchapter M of the Code. If it
qualifies as a regulated investment company, the Fund will pay no federal
income taxes on its taxable net investment income (that is, taxable income
other than net realized capital gains) and its net realized capital gains that
are distributed to shareholders. To qualify under Subchapter M, the Fund
must, among other things: (i) distribute to its shareholders at least 90% of
its taxable net investment income (for this purpose consisting of taxable net
investment income and net realized short-term capital gains); (ii) derive at
least 90% of its gross income from dividends, interest, payments with respect
to loans of securities, gains from the sale or other disposition of
securities, or other income (including, but not limited to, gains from
options, futures, and forward contracts) derived with respect to the Fund's
business of investing in
<PAGE>36
securities; (iii) derive less than 30% of its annual gross income from the
sale or other disposition of securities, options, futures or forward contracts
held for less than three months; and (iv) diversify its holdings so that, at
the end of each fiscal quarter of the Fund (a) at least 50% of the market
value of the Fund's assets is represented by cash, U.S. Government Securities
and other securities, with those other securities limited, with respect to any
one issuer, to an amount no greater in value than 5% of the Fund's total
assets and to not more than 10% of the outstanding voting securities of the
issuer, and (b) not more than 25% of the market value of the Fund's assets is
invested in the securities of any one issuer (other than U.S. Government
Securities or securities of other regulated investment companies) or of two or
more issuers that the Fund controls and that are determined to be in the same
or similar trades or businesses or related trades or businesses. In meeting
these requirements, the Fund may be restricted in the selling of securities
held by the Fund for less than three months and in the utilization of certain
of the investment techniques described above and in the Fund's Prospectuses.
As a regulated investment company, the Fund will be subject to a 4% non-
deductible excise tax measured with respect to certain undistributed amounts
of ordinary income and capital gain required to be but not distributed under a
prescribed formula. The formula requires payment to shareholders during a
calendar year of distributions representing at least 98% of the Fund's taxable
ordinary income for the calendar year and at least 98% of the excess of its
capital gains over capital losses realized during the one-year period ending
October 31 during such year, together with any undistributed, untaxed amounts
of ordinary income and capital gains from the previous calendar year. The
Fund expects to pay the dividends and make the distributions necessary to
avoid the application of this excise tax.
The Fund's transactions, if any, in foreign currencies, forward
contracts, options and futures contracts (including options and forward
contracts on foreign currencies) will be subject to special provisions of the
Code that, among other things, may affect the character of gains and losses
recognized by the Fund (i.e., may affect whether gains or losses are ordinary
or capital), accelerate recognition of income to the Fund, defer Fund losses
and cause the Fund to be subject to hyperinflationary currency rules. These
rules could therefore affect the character, amount and timing of distributions
to shareholders. These provisions also (i) will require the Fund to mark-to-
market certain types of its positions (i.e., treat them as if they were closed
out) and (ii) may cause the Fund to recognize income without receiving cash
with which to pay dividends or make distributions in amounts necessary to
satisfy the distribution requirements for avoiding income and excise taxes.
The Fund will monitor its transactions, will make the appropriate tax
elections and will make the appropriate entries in its books and records when
it acquires any foreign currency, forward contract, option, futures contract
or hedged investment so that (a) neither the Fund nor its shareholders will be
treated as receiving a materially greater amount of capital gains or
distributions than actually realized or received, (b) the Fund will be able to
use substantially all of its losses for the fiscal years in which the losses
actually occur and (c) the Fund will continue to qualify as a regulated
investment company.
<PAGE>37
A shareholder of the Fund receiving dividends or distributions in
additional shares should be treated for federal income tax purposes as
receiving a distribution in an amount equal to the amount of money that a
shareholder receiving cash dividends or distributions receives, and should
have a cost basis in the shares received equal to that amount.
Investors considering buying shares just prior to a dividend or
capital gain distribution should be aware that, although the price of shares
purchased at that time may reflect the amount of the forthcoming distribution,
those who purchase just prior to a distribution will receive a distribution
that will nevertheless be taxable to them. Upon the sale or exchange of
shares, a shareholder will realize a taxable gain or loss depending upon the
amount realized and the basis in the shares. Such gain or loss will be
treated as capital gain or loss if the shares are capital assets in the
shareholder's hands, and, as described in the Prospectuses, will be long-term
or short-term depending upon the shareholder's holding period for the shares.
Any loss realized on a sale or exchange will be disallowed to the extent the
shares disposed of are replaced, including replacement through the
reinvestment of dividends and capital gains distributions in the Fund, within
a period of 61 days beginning 30 days before and ending 30 days after the
disposition of the shares. In such a case, the basis of the shares acquired
will be increased to reflect the disallowed loss.
Each shareholder will receive an annual statement as to the federal
income tax status of his dividends and distributions from the Fund for the
prior calendar year. Furthermore, shareholders will also receive, if
appropriate, various written notices after the close of the Fund's taxable
year regarding the federal income tax status of certain dividends and
distributions that were paid (or that are treated as having been paid) by the
Fund to its shareholders during the preceding year.
If a shareholder fails to furnish a correct taxpayer identification
number, fails to report fully dividend or interest income, or fails to certify
that he has provided a correct taxpayer identification number and that he is
not subject to "backup withholding," the shareholder may be subject to a 31%
"backup withholding" tax with respect to (i) taxable dividends and
distributions and (ii) the proceeds of any sales or repurchases of shares of
the Fund. An individual's taxpayer identification number is his social
security number. Corporate shareholders and other shareholders specified in
the Code are or may be exempt from backup withholding. The backup withholding
tax is not an additional tax and may be credited against a taxpayer's federal
income tax liability. Dividends and distributions also may be subject to
state and local taxes depending on each shareholder's particular situation.
Investment in Passive Foreign Investment Companies
If the Fund purchases shares in certain foreign entities classified
under the Code as "passive foreign investment companies" ("PFICs"), the Fund
may be subject to federal income tax on a portion of an "excess distribution"
or gain from the disposition of the shares, even though the income may have to
be distributed as a taxable dividend by the Fund
<PAGE>38
to its shareholders. In addition, gain on the disposition of shares in a PFIC
generally is treated as ordinary income even though the shares are capital
assets in the hands of the Fund. Certain interest charges may be imposed on
either the Fund or its shareholders with respect to any taxes arising from
excess distributions or gains on the disposition of shares in a PFIC.
The Fund may be eligible to elect to include in its gross income its
share of earnings of a PFIC on a current basis. Generally, the election would
eliminate the interest charge and the ordinary income treatment on the
disposition of stock, but such an election may have the effect of accelerating
the recognition of income and gains by the Fund compared to a fund that did
not make the election. In addition, information required to make such an
election may not be available to the Fund.
On April 1, 1992 proposed regulations of the Internal Revenue
Service (the "IRS") were published providing a mark-to-market election for
regulated investment companies. The IRS subsequently issued a notice
indicating that final regulations will provide that regulated investment
companies may elect the mark-to-market election for tax years ending after
March 31, 1992 and before April 1, 1993. Whether and to what extent the
notice will apply to taxable years of the Fund is unclear. If the Fund is not
able to make the foregoing election, it may be able to avoid the interest
charge (but not the ordinary income treatment) on disposition of the stock by
electing, under proposed regulations, each year to mark-to-market the stock
(that is, treat it as if it were sold for fair market value). Such an
election could result in acceleration of income to the Fund.
DETERMINATION OF PERFORMANCE
From time to time, the Fund may quote the total return of its Common
Shares and/or Advisor Shares in advertisements or in reports and other
communications to shareholders. With respect to the Fund's Common Shares, the
Fund's average annual total return for the one-year period ended October 31,
1995 was 10.65% (9.86% without waivers), the average annual total return for
the five-year period beginning November 1, 1990 (commencement of operations)
and ended October 31, 1995 was 8.46% (6.88% without waivers). These figures
are calculated by finding the average annual compounded rates of return for
the one-, five- and ten- (or such shorter period as the relevant class of
shares has been offered) year periods that would equate the initial amount
invested to the ending redeemable value according to the following formula: P
(1 + T)[*GRAPHIC OMITTED-SEE FOOTNOTE BELOW] = ERV. For purposes of this
formula, "P" is a hypothetical investment of $1,000; "T" is average annual
total return; "n" is number of years; and "ERV" is the ending redeemable
value of a hypothetical $1,000 payment made at the beginning of the one-,
five- or ten-year periods (or fractional portion thereof). Total return or
"T" is computed by finding the average annual change in the value of an
initial $1,000 investment over the period and assumes that all dividends and
distributions are reinvested during the period.
- ------------------------
* The expression (1 + T) is being raised to the nth power.
<PAGE>39
The Fund may advertise, from time to time, comparisons of the
performance of its Common Shares and/or Advisor Shares with that of one or
more other mutual funds with similar investment objectives. The Fund may
advertise average annual calendar year-to-date and calendar quarter returns,
which are calculated according to the formula set forth in the preceding
paragraph, except that the relevant measuring period would be the number of
months that have elapsed in the current calendar year or most recent three
months, as the case may be. Investors should note that this performance may
not be representative of the Fund's total return in longer market cycles.
Yield is calculated by annualizing the net investment income
generated by the Fund over a specified thirty-day period according to the
following formula:
YIELD = 2[(a-b +1)[*GRAPHIC OMITTED-SEE FOOTNOTE BELOW]-1]
--------------------------------------------------
cd
For purposes of this formula: "a" is dividends and interest earned during the
period; "b" is expenses accrued for the period (net of reimbursements); "c" is
the average daily number of shares outstanding during the period that were
entitled to receive dividends; and "d" is the maximum offering price per share
on the last day of the period. The Fund's yield for the thirty-day period
ending October 31, 1995 was 8.76%.
The performance of a class of Fund Shares will vary from time to
time depending upon market conditions, the composition of the Fund's portfolio
and operating expenses allocable to it. As described above, total return is
based on historical earnings and is not intended to indicate future
performance. Consequently, any given performance quotation should not be
considered as representative of performance for any specified period in the
future. Performance information may be useful as a basis for comparison with
other investment alternatives. However, the Fund's performance will
fluctuate, unlike certain bank deposits or other investments which pay a fixed
yield for a stated period of time. Any fees charged by Institutions or other
institutional investors directly to their customers in connection with
investments in Fund shares are not reflected in the Fund's performance figures
and such fees, if charged, will reduce the actual return received by customers
on their investments.
AUDITORS AND COUNSEL
Coopers & Lybrand L.L.P. ("Coopers & Lybrand"), with principal
offices at 2400 Eleven Penn Center, Philadelphia, Pennsylvania 19103, serves
as independent accountants for the Fund. The financial statements for the
fiscal years ended October 31, 1994 and October 31, 1995 that appear in this
Statement of Additional Information have been audited by Coopers & Lybrand,
whose report thereon appears elsewhere herein and have been included herein in
reliance upon the report of such firm of independent accountants given upon
their authority as experts in accounting and auditing.
- ------------------------
* The expression (a-b+1) is being raised to the 6th power.
<PAGE>40
The financial statements for the periods beginning with commencement
of the Fund through October 31, 1992 have been audited by Ernst & Young LLP
("Ernst & Young"), independent accountants, as set forth in their report and
have been included in reliance on such report and upon the authority of such
firm as experts in accounting and auditing. Ernst & Young's address is 787
7th Avenue, New York, New York 10019.
Willkie Farr & Gallagher serves as counsel for the Fund as well as
counsel to Warburg, Counsellors Service and Counsellors Securities.
MISCELLANEOUS
As of December 28, 1995, the name, address and percentage of
ownership of each person (other than Mr. Furth, see "Management of the Fund")
that owns of record 5% or more of a class of the Fund's outstanding shares
were as follows:
Common Shares
Charles Schwab & Co., Inc., Attn: Mutual Funds Department, 101
Montgomery Street, San Francisco, CA 94104-4122 -- 29.61%; and Nat'l Financial
Svsc Corp., FBO Customers, Church Street Station, New York, NY 10008-3908 --
9.44%. The Fund believes that these entities are not the beneficial owners of
shares held of record by them. Mr. Lionel I. Pincus, Chairman of the Board
and Chief Executive Officer of EMW, may be deemed to have beneficially owned
44.21% of the Common Shares outstanding, including shares owned by clients for
which Warburg has investment discretion and by companies that EMW may be
deemed to control. Mr. Pincus disclaims ownership of these shares and does
not intend to exercise voting rights with respect to these shares.
FINANCIAL STATEMENTS
The Fund's audited financial statements for the fiscal year ended
October 31, 1995 follow the Report of Independent Accountants.
<PAGE>A-1
APPENDIX
DESCRIPTION OF RATINGS
Commercial Paper Ratings
Commercial paper rated A-1 by Standard and Poor's Ratings Group
("S&P") indicates that the degree of safety regarding timely payment is
strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign designation. Capacity for timely
payment on commercial paper rated A-2 is satisfactory, but the relative degree
of safety is not as high as for issues designated A-1.
The rating Prime-1 is the highest commercial paper rating assigned
by Moody's Investors Services, Inc. ("Moody's"). Issuers rated Prime-1 (or
related supporting institutions) are considered to have a superior capacity
for repayment of short-term promissory obligations. Issuers rated Prime-2 (or
related supporting institutions) are considered to have a strong capacity for
repayment of short-term promissory obligations. This will normally be
evidenced by many of the characteristics of issuers rated Prime-1 but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternative
liquidity is maintained.
Corporate Bond Ratings
The following summarizes the ratings used by S&P for corporate
bonds:
AAA - This is the highest rating assigned by S&P to a debt
obligation and indicates an extremely strong capacity to pay interest and
repay principal.
AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from AAA issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher-rated
categories.
BBB - This is the lowest investment grade. Debt rated BBB an
adequate capacity to pay interest and repay principal. Although it normally
exhibits adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds in
higher rated categories.
BB, B, CCC, CC, C - Debt rated BB, B, CCC, CC and C is regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay
<PAGE>A-2
principal in accordance with the terms of the obligation. BB represents a
lower degree of speculation than B and C the highest degree of speculation.
While such bonds will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions.
BB - Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, they face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions, which could
lead to inadequate capacity to meet timely interest and principal payments.
The BB rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied BBB rating.
B - Debt rated B has a greater vulnerability to default but
currently have the capacity to meet interest payments and principal
repayments. Adverse business, financial, or economic conditions will likely
impair capacity or willingness to pay interest and repay principal. The B
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BB or BBB rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to
default and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal. In
the event of adverse business, financial or economic conditions, it is not
likely to have the capacity to pay interest and repay, principal. The CCC
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied B or B- rating.
CC - This rating is typically applied to debt subordinated to senior
debt that is assigned an actual or implied CCC rating.
C - This rating is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating. The C rating
may be used to cover a situation where a bankruptcy petition has been filed,
but debt service payments are continued.
Additionally, the rating CI is reserved for income bonds on which no
interest is being paid. Such debt is rated between debt rated C and debt
rated D.
D - Debt rated D is in payment default. The D rating category is
used when interest payments or principal payments are not made on the date due
even if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period. The D rating also will
be used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
To provide more detailed indications of credit quality, the ratings
from "AA" to "CCC" may be modified by the addition of a plus or minus sign to
show relative standing within this major rating category.
<PAGE>A-3
The following summarizes the ratings used by Moody's for corporate
bonds:
Aaa - Bonds that are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred
to as "gilt edged." Interest payments are protected by a large or
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
Aa - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment sometime
in the future.
Baa - Bonds which are rated Baa are considered as medium-grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba - Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of
desirable investments. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Moody's applies numerical modifiers (1, 2 and 3) with respect to the
bonds rated "Aa" through "B". The modifier 1 indicates that the bond being
rated ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the bond
ranks in the lower end of its generic rating category.
Caa - Bonds that are rated Caa are of poor standing. These issues
may be in default or present elements of danger may exist with respect to
principal or interest.
<PAGE>A-4
Ca - Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C - Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS FIXED INCOME FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Boards of Directors, Trustees and Shareholders of
Warburg Pincus Fixed Income Funds:
We have audited the accompanying statement of assets and liabilities including
the schedule of investments of the Warburg Pincus Intermediate Maturity
Government Fund and the statements of net assets of the Warburg Pincus Fixed
Income Fund, Warburg Pincus Global Fixed Income Fund and Warburg Pincus New York
Intermediate Municipal Fund (all Funds collectively referred to as the 'Warburg
Pincus Fixed Income Funds') as of October 31, 1995, and the related statements
of operations for the year then ended and the statements of changes in net
assets for each of the two years and the financial highlights for each of the
three years in the period then ended. These financial statements and financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The financial highlights of each of the Warburg Pincus
Fixed Income Funds for each of the two years in the period ended October 31,
1992, were audited by other auditors, whose report dated December 15, 1992,
expressed an unqualified opinion.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodians and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Warburg Pincus Fixed Income Funds as of October 31, 1995, and the results
of their operations for the year then ended, and the changes in their net assets
for each of the two years and the financial highlights for each of the three
years in the period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, PA
December 14, 1995
34
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS GLOBAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
December 8, 1995
Dear Shareholder:
The objective of Warburg Pincus Global Fixed Income Fund (the 'Fund') is
maximum total return -- consistent with prudent management -- through a
combination of interest income, currency gains and capital appreciation. The
Fund's holdings mainly include a wide range of investment-grade,
income-producing securities of governmental and corporate issuers.
For the 12 months ended October 31, 1995, the Fund gained 10.65%, vs. gains
of 15.85% in the Salomon Brothers World Government Bond Index (Currency-Hedged)
and 8.77% in the Lipper World Income Fund Average. The Fund's 30-day annualized
SEC yield was 8.76% as of October 31, 1995. Its total net assets were
$63,641,044.
The combination of low inflation, falling interest rates and an overall
slowdown in the world's economic growth provided a strong backdrop for most
global bond markets during the period. By region, our largest exposure during
the year was to bonds of European issuers, which generated strong returns for
the portfolio. We remain bullish on the prospects of Europe's bond markets
(European issues represented 67.50% of the Fund's assets as of October 31,
1995), particularly those of Germany and Denmark.
Other areas of emphasis in the portfolio currently are Southeast Asian
convertible bonds, which we think represent particularly good values, and Latin
American debt issues. While the latter fell sharply following the December 20,
1994, devaluation of the Mexican peso, exacting a toll on the Fund's returns,
their performance has since recovered, and we expect significantly improved
performance from them going forward. Our largest exposure in Latin America is in
Argentina and Brazil (6.1% of the Fund at the end of October), followed by
Mexico (4.0%). It should be noted that all of these issues are U.S. dollar
denominated and thus there is no direct currency risk.
We have extended the Fund's duration in recent months (it stood at 4.9
years on October 31, vs. 4.0 years at the end of April), reflecting a more
positive outlook on the general direction of interest rates. Our longest
duration exposure is in Australia and Europe.
We have maintained the Fund's defensive stance in terms of currency
exposure, and through October approximately 95% of the portfolio was either U.S.
dollar-denominated or hedged into dollars. While this strategy proved less than
timely earlier in the fiscal year, given the U.S. currency's general weakness
against most foreign currencies, it proved its merits over the past several
months when the dollar rebounded.
<TABLE>
<S> <C>
Dale C. Christensen Laxmi C. Bhandari
Co-Portfolio Manager Co-Portfolio Manager
</TABLE>
4
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS GLOBAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN WARBURG PINCUS GLOBAL FIXED INCOME FUND
SINCE INCEPTION AS OF OCTOBER 31, 1995
The graph below illustrates the hypothetical investment of $10,000 in
Warburg Pincus Global Fixed Income Fund (the 'Fund') from November 1, 1990
(inception) to October 31, 1995, assuming the reinvestment of dividends and
capital gains at net asset value, compared to the Salomon Brothers World
Government Bond Index (Currency-Hedged) ('Salomon')* and the Lipper World Income
Fund Average ('Lipper')** for the same time period.
<TABLE>
<CAPTION>
[PERFORMANCE GRAPH]
Average Annual
Total Returns
for periods ending
FUND SALOMAN*** LIPPER 10/31/95
<S> <C> <C> <C> <C>
11/1/90 10,000.0 10,000.0 10,000.0 1 year
10/31/91 10,766.0 11,308.0 10,933.0 10.65%
10/31/92 11,958.0 12,449.0 11,600.0 Since Inception
10/31/93 13,957.0 13,968.0 12,959.0 (11/01/90)
10/31/94 13,567.0 13,494.0 12,691.0 8.46%
10/31/95 15,012.0 15,633.0 13,804.0
</TABLE>
<TABLE>
<CAPTION>
FUND
------
<S> <C>
1 Year Total Return (9/30/94-9/30/95)................................................. 10.50%
Average Annual Total Return Since Inception (11/01/90-9/30/95)........................ 8.39%
</TABLE>
All figures cited here represent past performance and do not guarantee
future results. Investment return and principal value of an investment will
fluctuate so that an investor's shares upon redemption may be worth more or less
than original cost. For periods ending 9/30/95 and 10/31/95, respectively,
without waivers or reimbursement of Fund expenses, average annual total returns
would have been 9.73% and 9.86% for 1-year, and 6.80% and 6.88% since inception.
- ------------
* The Salomon Brothers World Government Bond Index (Currency-Hedged) is a
market capitalization-weighted index designed to track major government debt
markets and is currency-hedged into U.S. dollars.
** The Lipper World Income Fund Average represents approximately 220 funds that
invest in non-U.S. dollar and U.S. dollar debt instruments with unspecified
maturities and durations, or other income producing securities.
*** The Fund changed its comparative index in the above chart from the J.P.
Morgan Global Government Bond Index ('JPMG-GLB') used in the preceding year
to the Salomon Brothers World Government Bond Index ('Salomon'). The primary
reason for the change is that the Fund's investment strategy is biased
towards hedging and the Salomon Index is hedged. In contrast, the JPMG-GLB
Index is unhedged. The one year performance for the period ending 10/31/95
for Salomon and JPMG-GLB was 15.85% vs. 15.35%, respectively.
5
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS GLOBAL FIXED INCOME FUND
STATEMENT OF NET ASSETS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS'D'
PAR+ SECURITY DESCRIPTION (MOODY'S/S&P) MATURITY RATE VALUE
- ------------ --------------------------------------------------- ------------- --------- ------ -----------
<C> <S> <C> <C> <C> <C>
BONDS (89.8%)
Argentina (6.1%)
1,000,000 (A) Banco de Galicia & Buenos Aires SA (Callable
11/01/98 at $103.375) (B1/BB-) 11/01/03 9.000% $ 751,250
1,280,000 (A) Banco del Suquia (Ba/BB) 07/05/96 10.000 1,209,600
2,000,000 (A) Bridas Corp. (B1/BB-) 11/15/99 12.500 1,915,000
-----------
3,875,850
-----------
Australia (3.2%)
2,000,000 Australian Government (NR/AAA) 11/15/06 6.750 1,297,094
1,000,000 State Electric Commission -- Victoria (Aa2/NR) 09/18/03 9.250 769,115
-----------
2,066,209
-----------
Brazil (6.1%)
1,000,000 (A) Banco America do Sul (B1/BB) 10/17/97 10.750 1,000,000
900,000 (A) Banco Bandeirantes SA (B1/BB) 12/20/97 12.000 893,250
1,000,000 (A) Banco Braseg AG (B1/BB) 12/07/97 11.250 991,250
1,000,000 (A) Banco Itamarati SA (NR/BB) 11/23/97 11.625 991,250
-----------
3,875,750
-----------
Cayman Islands (3.2%)
2,500,000 (A) PIV Investment Financial (Convertible) (Callable
02/02/97 at $100.00) (A/NR) 12/01/00 4.500 2,031,250
-----------
Denmark (16.6%)
35,000,000 Kingdom of Denmark (Aa/AA) 03/15/06 8.000 6,448,127
780,000 (B) Kingdom of Denmark Mortgage-Backed (Zero Coupon) (Aa1/NR) 05/30/96 -- 984,366
2,582,000 Kreditforeningen (Callable 04/15/01 at 100.00 Dkr) (Baa/NR) 04/15/04 10.200 505,950
13,467,000 Nykredit (Aa/AA) 10/01/22 11.000 2,611,767
-----------
10,550,210
-----------
Germany (23.4%)
6,000,000 German Government (Aaa/AAA) 10/14/05 6.500 4,279,681
5,000,000 Land Hessen (Putable 11/29/03 at 100.00 Dmk) (Aaa/AAA) 11/29/13 6.000 3,412,484
9,500,000 Treuhandanstalt (Aaa/AAA) 09/09/04 7.500 7,196,929
-----------
14,889,094
-----------
Hong Kong (3.2%)
2,500,000 (A) Lai Fung Overseas Finance Ltd. (Convertible) (Ba/BB) 01/05/98 5.500 2,025,000
-----------
Indonesia (2.4%)
1,500,000 (A) Indah Kiat International Finance Co. (Callable
06/15/01 at $106.25) (Ba2/BB) 06/15/06 12.500 1,563,750
-----------
Ireland (7.9%)
3,500,000 Ireland Treasury (Aa/AA) 10/18/04 6.250 5,045,956
-----------
Mexico (4.0%)
2,420,000 (A) Grupo Simec SA de CV (Caa/CCC) 12/15/98 8.875 1,433,850
2,000,000 (A) Seventh Mexican Acceptance Corp. (Caa/CCC) 08/15/99 10.000 1,110,000
-----------
2,543,850
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
12
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS GLOBAL FIXED INCOME FUND
STATEMENT OF NET ASSETS (CONT'D)
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS'D'
PAR+ SECURITY DESCRIPTION (MOODY'S/S&P) MATURITY RATE VALUE
- ------------ --------------------------------------------------- ------------- --------- ------ -----------
<C> <S> <C> <C> <C> <C>
BONDS (CONT'D)
Netherlands (4.6%)
4,500,000 Netherlands Government (Aaa/AAA) 06/15/05 7.000% $ 2,956,173
-----------
United Kingdom (8.9%)
2,000,000 Elf Enterprise Finance PLC (Convertible) (Callable
06/27/96 at 100.00 Gbp) (Aa3/AA-) 06/27/06 8.750 3,137,094
1,500,000 United Kingdom Treasury (Aaa/NR) 03/03/00 9.000 2,511,354
-----------
5,648,448
-----------
United States (0.2%)
100,000 U.S. Treasury Note (Aaa/AAA) 06/30/96 6.000 100,267
-----------
TOTAL BONDS (Cost $57,315,695) 57,171,807
-----------
</TABLE>
<TABLE>
<CAPTION>
PREFERRED STOCK (6.1%)
SHARES
<C> <S> <C> <C>
France (1.9%)
50,000 Credit Lyonnais Capital SCA ADR 9.500 1,212,500
-----------
Luxembourg (4.2%)
100,000 Indosuez Holdings SCA ADR 10.375 2,687,500
-----------
TOTAL PREFERRED STOCK (Cost $3,558,500) 3,900,000
-----------
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS (5.0%)
PAR
- ------------
<C> <S> <C>
$3,178,000 Repurchase agreement with State Street Bank & Trust
Company dated 10/31/95 at 5.83% to be repurchased
at $3,178,515 on 11/01/95. (Collateralized by
$3,210,000 U.S. Treasury Note 6.875%, due 10/31/96,
with a market value of $3,250,125.) (Cost
$3,178,000) 3,178,000
-----------
TOTAL INVESTMENTS AT VALUE (100.9%) (Cost $64,052,195*) 64,249,807
LIABILITIES IN EXCESS OF OTHER ASSETS (0.9%) (608,763)
-----------
NET ASSETS (100.0%) (applicable to 5,764,342 shares) $63,641,044
-----------
-----------
NET ASSET VALUE, offering and redemption price per share
($63,641,044[div]5,764,342) $11.04
------
------
</TABLE>
INVESTMENT ABBREVIATIONS
<TABLE>
<C> <S>
ADR = American Depository Receipts
DKR = Danish Krone
DMK = German Marks
GBP = British Pounds
</TABLE>
'D' Credit ratings given by Moody's Investors Service, Inc. and Standard &
Poor's Ratings Group are unaudited.
* Cost for Federal income tax purposes is $64,063,170.
+ Unless otherwise indicated below, all securities are denominated in the
currency of the issuers' country of origin.
(A) Denominated in Dollars (U.S.)
(B) Denominated in European Currency Units (ECU)
See Accompanying Notes to Financial Statements.
13
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS FIXED INCOME FUNDS
STATEMENTS OF OPERATIONS
For the Year Ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Warburg
Warburg Pincus Warburg Pincus
Warburg Pincus Intermediate New York
Pincus Global Maturity Intermediate
Fixed Income Fixed Income Government Municipal
Fund Fund Fund Fund
------------ ------------ ---------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 8,376,182 $6,507,144 $3,252,179 $3,982,642
Dividends 470,438 552,228 98,083 45,198
------------ ------------ ---------- --------------
Total investment income 8,846,620 7,059,372 3,350,262 4,027,840
------------ ------------ ---------- --------------
EXPENSES:
Investment advisory 555,483 773,318 253,734 316,050
Administrative services 222,194 170,130 102,661 158,024
Audit 15,674 16,985 16,975 15,975
Custodian/Sub-custodian 48,401 44,270 17,340 23,471
Directors/Trustees 10,500 10,500 10,500 10,500
Insurance 6,127 5,754 3,692 4,479
Legal 73,175 72,631 58,060 70,563
Printing 11,861 4,525 5,236 12,489
Registration 31,178 31,790 26,398 16,631
Transfer agent 48,503 51,309 43,347 33,447
Miscellaneous 14,281 38,611 14,726 14,365
------------ ------------ ---------- --------------
1,037,377 1,219,823 552,669 675,994
Less: fees waived (204,153) (485,160) (248,192) (201,919)
------------ ------------ ---------- --------------
Total expenses 833,224 734,663 304,477 474,075
------------ ------------ ---------- --------------
Net investment income 8,013,396 6,324,709 3,045,785 3,553,765
------------ ------------ ---------- --------------
NET REALIZED AND UNREALIZED GAIN FROM INVESTMENTS
AND FOREIGN CURRENCY RELATED ITEMS:
Net realized gain from security transactions 1,132,052 508,655 514,443 818,720
Net realized loss from futures contracts (606,653) (849,500) 0 0
Net realized gain (loss) from foreign currency
related items 49,446 (961,036) 0 0
Net decrease in unrealized depreciation from
investments and foreign currency related
items 4,869,743 2,015,972 2,406,718 1,979,229
------------ ------------ ---------- --------------
Net realized and unrealized gain from
investments and foreign currency
related items 5,444,588 714,091 2,921,161 2,797,949
------------ ------------ ---------- --------------
Net increase in net assets resulting
from operations $ 13,457,984 $7,038,800 $5,966,946 $6,351,714
------------ ------------ ---------- --------------
------------ ------------ ---------- --------------
</TABLE>
See Accompanying Notes to Financial Statements.
19
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS FIXED INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Warburg Pincus Warburg Pincus
Fixed Income Global Fixed
Fund Income Fund
----------------------------- -----------------------------
For the Year Ended October For the Year Ended October
31, 31,
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income $ 8,013,396 $ 5,867,260 $ 6,324,709 $ 5,807,634
Net realized gain (loss) from security
transactions 1,132,052 (1,660,108) 508,655 (1,869,553)
Net realized gain (loss) from futures
contracts (606,653) 117,484 (849,500) 269,845
Net realized gain (loss) from foreign
currency related items 49,446 18,246 (961,036) (2,237,413)
Net change in unrealized appreciation
(depreciation) from investments and
foreign currency related items 4,869,743 (4,804,661) 2,015,972 (4,227,712)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations 13,457,984 (461,779) 7,038,800 (2,257,199)
------------ ------------ ------------ ------------
FROM DISTRIBUTIONS:
Dividends from net investment income (8,013,396) (5,926,356) (3,445,878) (3,215,939)
Distributions from capital gains 0 (732,704) 0 (827,403)
Return of capital 0 0 0 (366,074)
------------ ------------ ------------ ------------
Net decrease from distributions (8,013,396) (6,659,060) (3,445,878) (4,409,416)
------------ ------------ ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 47,678,747 58,018,967 42,488,917 61,614,112
Reinvested dividends 6,555,741 5,623,287 2,941,954 3,798,759
Net asset value of shares redeemed (44,942,286) (35,456,760) (75,776,818) (30,346,474)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
from capital share transactions 9,292,202 28,185,494 (30,345,947) 35,066,397
------------ ------------ ------------ ------------
Net increase (decrease) in net assets 14,736,790 21,064,655 (26,753,025) 28,399,782
NET ASSETS:
Beginning of year 102,246,118 81,181,463 90,394,069 61,994,287
------------ ------------ ------------ ------------
End of year $116,982,908 $102,246,118 $ 63,641,044 $ 90,394,069
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
20
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<CAPTION>
Warburg Pincus Warburg Pincus
Intermediate Maturity New York Intermediate
Government Fund Municipal Fund
--------------------------------- ---------------------------------
For the Year Ended October 31, For the Year Ended October 31,
1995 1994 1995 1994
------------ ------------ ------------ ------------
<C> <C> <C> <C>
$ 3,045,785 $ 2,827,703 $ 3,553,765 $ 3,215,210
514,443 (58,020) 818,720 47,719
0 0 0 0
0 0 0 0
2,406,718 (3,492,181) 1,979,229 (3,387,003)
------------ ------------ ------------ ------------
5,966,946 (722,498) 6,351,714 (124,074)
------------ ------------ ------------ ------------
(3,045,785) (2,827,703) (3,553,765) (3,222,899)
0 (3,937,754) (47,531) (912,745)
0 0 0 0
------------ ------------ ------------ ------------
(3,045,785) (6,765,457) (3,601,296) (4,135,644)
------------ ------------ ------------ ------------
26,773,501 24,310,135 32,441,402 50,293,197
2,288,064 5,552,546 3,073,742 3,404,096
(22,818,476) (53,205,957) (40,620,180) (43,299,063)
------------ ------------ ------------ ------------
6,243,089 (23,343,276) (5,105,036) 10,398,230
------------ ------------ ------------ ------------
9,164,250 (30,831,231) (2,354,618) 6,138,512
46,733,653 77,564,884 75,716,095 69,577,583
------------ ------------ ------------ ------------
$ 55,897,903 $ 46,733,653 $ 73,361,477 $ 75,716,095
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See Accompanying Notes to Financial Statements.
21
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS GLOBAL FIXED INCOME FUND
FINANCIAL HIGHLIGHTS
(For a Share of the Fund Outstanding Throughout Each Year)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended October 31,
---------------------------------------------------
1995 1994 1993 1992 1991+
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $ 10.45 $ 11.38 $ 10.68 $ 10.40 $ 10.00
------- ------- ------- ------- -------
Income from Investment Operations:
Net Investment Income .99 .34 .54 .86 .59
Net Gain (Loss) on Securities and Foreign Currency
Related Items (both realized and unrealized) .09 (.64) 1.13 .28 .14
------- ------- ------- ------- -------
Total from Investment Operations 1.08 (.30) 1.67 1.14 .73
------- ------- ------- ------- -------
Less Distributions:
Dividends from Net Investment Income (.49) (.45) (.85) (.67) (.33)
Distributions from Capital Gains .00 (.14) (.12) (.19) .00
Return of Capital .00 (.04) .00 .00 .00
------- ------- ------- ------- -------
Total Distributions (.49) (.63) (.97) (.86) (.33)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF YEAR $ 11.04 $ 10.45 $ 11.38 $ 10.68 $ 10.40
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Total Return 10.65% (2.79%) 16.72% 11.08% 7.66%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year (000s) $63,641 $90,394 $61,994 $17,092 $12,160
Ratios to average daily net assets:
Operating expenses .95% .95% .49% .45% 1.09%
Net investment income 8.18% 6.96% 8.60% 8.66% 7.45%
Decrease reflected in above operating expense ratios due
to waivers/reimbursements .63% .65% 1.44% 2.42% 2.73%
Portfolio Turnover Rate 128.70% 178.11% 109.54% 93.14% 185.74%
</TABLE>
+ The Fund commenced operations on November 1, 1990.
See Accompanying Notes to Financial Statements.
TAX STATUS OF 1995 DIVIDENDS (Unaudited)
Dividends paid by the Fund taxable as ordinary income amounted to $.49 per
share.
Because the Fund's fiscal year is not the calendar year, amounts to be used by
calendar year taxpayers on their Federal return will be reflected on Form
1099-DIV and will be mailed in January 1996.
23
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The Warburg Pincus Fixed Income Funds are comprised of the Warburg Pincus
Fixed Income Fund (the 'Fixed Income Fund') and the Warburg Pincus Intermediate
Maturity Government Fund (the 'Intermediate Government Fund') which are
registered under the Investment Company Act of 1940, as amended (the '1940
Act'), as diversified, open-end management investment companies and the Warburg
Pincus Global Fixed Income Fund (the 'Global Fixed Income Fund') and the Warburg
Pincus New York Intermediate Municipal Fund (the 'New York Municipal Fund')
which are registered under the 1940 Act as non-diversified, open-end management
investment companies.
Investment objectives for each Fund are as follows: the Fixed Income Fund
seeks to generate high current income consistent with reasonable risk with
capital appreciation a secondary objective; the Global Fixed Income Fund seeks
to maximize total investment return consistent with prudent investment
management, consisting of a combination of interest income, currency gains and
capital appreciation; the Intermediate Government Fund seeks to achieve as high
a level of current income as is consistent with preservation of capital; and the
New York Municipal Fund seeks to maximize current interest income exempt from
Federal income tax and New York State and New York City personal income tax to
the extent consistent with prudent investment and preservation of capital.
The net asset value of each Fund is determined daily as of the close of
regular trading on the New York Stock Exchange. Each Fund's investments are
valued at market value, which is currently determined using the last reported
sales price. If no sales are reported, investments are generally valued at the
last reported bid price. In the absence of market quotations, investments are
generally valued at fair value as determined by or under the direction of the
Fund's governing Board. Short-term investments that mature in 60 days or less
are valued on the basis of amortized cost, which approximates market value.
The books and records of the Funds are maintained in U.S. dollars.
Transactions denominated in foreign currencies are recorded at the current
prevailing exchange rates. All assets and liabilities denominated in foreign
currencies are translated into U.S. dollar amounts at the current exchange rate
at the end of the period. Translation gains or losses resulting from changes in
the exchange rate during the reporting period and realized gains and losses on
the settlement of foreign currency transactions are reported in the results of
operations for the current period. The Global Fixed Income Fund isolates that
portion of gains and losses on investments in debt securities which are due to
changes in the foreign exchange rate from that which are due to changes in
market prices of debt securities.
Security transactions are accounted for on trade date. Interest income is
recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
The cost of investments sold is determined by use of the specific identification
method for both financial reporting and income tax purposes.
Dividends from net investment income are declared daily and paid monthly
for the Fixed Income Fund, the Intermediate Government Fund and the New York
Municipal Fund. Dividends from net investment income are declared and paid
quarterly for the Global Fixed Income Fund. Distributions for all Funds of net
realized capital gains, if any, are declared and paid annually. However, to the
extent that a net realized capital gain can be reduced by a capital loss
carryover, such gain will not be distributed.
26
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1995
- --------------------------------------------------------------------------------
Income and capital gain distributions are determined in accordance with Federal
income tax regulations which may differ from generally accepted accounting
principles.
Certain amounts in the Statements of Changes in Net Assets have been
reclassified to conform to current year presentation.
No provision is made for Federal taxes as it is each Fund's intention to
continue to qualify for and elect the tax treatment applicable to regulated
investment companies under the Internal Revenue Code and make the requisite
distributions to its shareholders which will be sufficient to relieve it from
Federal income and excise taxes.
Costs incurred by the Global Fixed Income Fund in connection with its
organization have been deferred and are being amortized over a period of five
years from the date the Global Fixed Income Fund commenced its operations.
Each Fund may enter into repurchase agreement transactions. Under the terms
of a typical repurchase agreement, a Fund acquires an underlying security
subject to an obligation of the seller to repurchase. The value of the
underlying security collateral will be maintained at an amount at least equal to
the total amount of the purchase obligation, including interest. The collateral
is in the Fund's possession.
2. INVESTMENT ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR
Warburg, Pincus Counsellors, Inc. ('Warburg'), a wholly owned subsidiary of
Warburg, Pincus Counsellors G.P. ('Counsellors G.P.'), serves as each Fund's
investment adviser. For its investment advisory services, Warburg receives the
following fees based on each Fund's average daily net assets:
<TABLE>
<CAPTION>
FUND ANNUAL RATE
- --------------------------------- ----------------------------------
<S> <C>
Fixed Income .50% of average daily net assets
Global Fixed Income 1.00% of average daily net assets
Intermediate Government .50% of average daily net assets
New York Municipal .40% of average daily net assets
</TABLE>
For the year ended October 31, 1995, investment advisory fees and waivers
were as follows:
<TABLE>
<CAPTION>
GROSS NET
FUND ADVISORY FEE WAIVER ADVISORY FEE
- --------------------------------------------------- ------------ --------- ------------
<S> <C> <C> <C>
Fixed Income $555,483 $(162,585) $392,898
Global Fixed Income 773,318 (435,848) 337,470
Intermediate Government 253,734 (226,320) 27,414
New York Municipal 316,050 (168,856) 147,194
</TABLE>
Counsellors Funds Service, Inc. ('CFSI'), a wholly owned subsidiary of
Warburg, and PFPC Inc. ('PFPC'), an indirect, wholly owned subsidiary of PNC
Bank Corp. ('PNC'), serve as each Fund's co-administrators. For administrative
services, CFSI currently receives a fee calculated at an annual rate of
27
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1995
- --------------------------------------------------------------------------------
.10% of each Fund's average daily net assets. For the year ended October 31,
1995, administrative services fees earned by CFSI were as follows:
<TABLE>
<CAPTION>
FUND CO-ADMINISTRATION FEE
- ----------------------------------------------------------------------- ---------------------
<S> <C>
Fixed Income $ 111,097
Global Fixed Income 77,332
Intermediate Government 50,747
New York Municipal 79,012
</TABLE>
For its administrative services, PFPC currently receives a fee calculated
at an annual rate of .10% of the average daily net assets of the Fixed Income
Fund, the Intermediate Government Fund and the New York Municipal Fund. For the
Global Fixed Income Fund, PFPC currently receives a fee calculated at an annual
rate of .12% of the first $250 million in average daily net assets, .10% of the
next $250 million in average daily net assets, .08% of the next $250 million in
average daily net assets and .05% of average daily net assets over $750 million.
For the year ended October 31, 1995, administrative services fees earned
and voluntarily waived by PFPC were as follows:
<TABLE>
<CAPTION>
FUND GROSS FEE WAIVER NET
- ----------------------------------------------------------- --------- -------- -------
<S> <C> <C> <C>
Fixed Income $ 111,097 $(41,568) $69,529
Global Fixed 92,798 (49,312) 43,486
Intermediate Government 51,914 (21,872) 30,042
New York Municipal 79,012 (33,063) 45,949
</TABLE>
Counsellors Securities Inc. ('CSI'), also a wholly owned subsidiary of
Warburg, serves as each Fund's distributor. No compensation is paid by the Funds
to CSI for distribution services.
3. INVESTMENTS IN SECURITIES
For the year ended October 31, 1995, purchases and sales of investment
securities (excluding short-term investments) and United States government and
agency obligations were as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT AND
INVESTMENT SECURITIES AGENCY OBLIGATIONS
--------------------------- ----------------------------
FUND PURCHASES SALES PURCHASES SALES
- --------------------------------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Fixed Income $69,506,438 $ 59,600,888 $144,593,744 $131,853,246
Global Fixed Income 79,097,036 108,742,015 9,808,921 11,805,050
Intermediate Government 0 0 61,570,880 50,413,561
New York Municipal 79,189,466 87,267,702 0 0
</TABLE>
28
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1995
- --------------------------------------------------------------------------------
At October 31, 1995, the net unrealized appreciation from investments for
those securities having an excess of value over cost and net unrealized
depreciation from investments for those securities having an excess of cost over
value (based on cost for Federal income tax purposes) was as follows:
<TABLE>
<CAPTION>
NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
FUND APPRECIATION DEPRECIATION (DEPRECIATION)
- ------------------------------------------------ ------------ ------------ --------------
<S> <C> <C> <C>
Fixed Income $2,550,123 $ (1,273,784) $1,276,339
Global Fixed Income 1,658,696 (1,472,059) 186,637
Intermediate Government 1,299,887 (263,103) 1,036,784
New York Municipal 1,976,753 (16,768) 1,959,985
</TABLE>
4. FORWARD FOREIGN CURRENCY CONTRACTS
The Fixed Income Fund and the Global Fixed Income Fund may enter into
forward currency contracts for the purchase or sale of a specific foreign
currency at a fixed price on a future date. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the terms
of their contracts and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The Funds will enter into forward
contracts primarily for hedging purposes. The forward currency contracts are
adjusted by the daily exchange rate of the underlying currency and any gains or
losses are recorded for financial statement purposes as unrealized until the
contract settlement date.
At October 31, 1995, the Global Fixed Income Fund had the following open
forward foreign currency contracts:
<TABLE>
<CAPTION>
FOREIGN UNREALIZED
FORWARD CURRENCY EXPIRATION CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE
CONTRACT DATE TO BE SOLD AMOUNT VALUE GAIN (LOSS)
- ------------------------ ---------- ---------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Australian Dollars 12/18/95 914,990 $ 690,818 $ 695,209 $ (4,391)
British Pounds 12/27/95 3,510,984 5,435,003 5,541,737 (106,734)
Danish Krone 12/18/95 29,059,448 5,281,904 5,319,710 (37,806)
German Marks 11/29/95 14,200,000 9,588,116 10,109,640 (521,524)
German Marks 11/29/95 375,092 255,164 267,045 (11,881)
German Marks 12/18/95 10,514,444 1,918,694 1,924,806 (6,112)
German Marks 12/18/95 10,513,889 1,934,834 1,924,704 10,130
German Marks 12/18/95 6,013,700 4,243,966 4,285,704 (41,738)
Irish Punt 12/18/95 2,881,250 4,639,677 4,671,371 (31,694)
Netherlands Guilder 11/29/95 4,577,075 2,760,600 2,896,883 (136,283)
Netherlands Guilder 11/29/95 79,014 49,138 50,009 (871)
----------- ----------- ----------------
$36,797,914 $37,686,818 $ (888,904)
----------- ----------- ----------------
----------- ----------- ----------------
</TABLE>
5. FUTURES CONTRACTS
Each Fund may enter into futures contracts for hedging purposes to the
extent permitted by its investment policies and objectives. To enter into a
futures contract, a Fund must make a deposit of an initial margin with its
custodian in a segregated account. Subsequent payments, which are dependent on
29
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1995
- --------------------------------------------------------------------------------
the daily fluctuations in the value of the underlying instrument, are made or
received by a Fund each day (daily variation margin) and are recorded as
unrealized gains or losses until the contracts are closed. When the contract is
closed, a Fund records a realized gain or loss equal to the difference between
the proceeds from (or cost of) the closing transactions and a Fund's basis in
the contract. Risks of entering into futures contracts include the possibility
that a change in the value of the contract may not correlate with the changes in
the value of the underlying instruments. The Fixed Income Fund and the Global
Fixed Income Fund entered into futures contracts during the year ended October
31, 1995. However, the Fixed Income Fund and Global Fixed Income Fund had no
futures contracts open at October 31, 1995.
6. CAPITAL SHARE TRANSACTIONS
The Global Fixed Income Fund and the Intermediate Government Fund are each
authorized to issue three billion full and fractional shares of capital stock,
$.001 par value per share, of which one billion shares are designated Series 2
Shares (the Advisor Shares). The Fixed Income Fund and the New York Municipal
Fund are each authorized to issue an unlimited number of full and fractional
shares of beneficial interest, $.001 par value per share, of which one billion
shares are designated Series 2 Shares (the Advisor Shares). At October 31, 1995,
no Advisor Shares were outstanding.
30
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
[THIS PAGE INTENTIONALLY LEFT BLANK]
31
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
October 31, 1995
- --------------------------------------------------------------------------------
6. CAPITAL SHARE TRANSACTIONS (cont'd)
Transactions in shares of each Fund were as follows:
<TABLE>
<CAPTION>
FIXED INCOME FUND GLOBAL FIXED INCOME FUND
For the Year Ended October 31, For the Year Ended October 31,
---------------------------------------- ----------------------------------
1995 1994 1995 1994
------------------- ------------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Shares sold 4,918,036 5,837,372 4,066,768 5,678,256
Shares issued to
shareholders on
reinvestment of
dividends 672,751 566,407 281,288 350,063
Shares redeemed (4,609,035) (3,561,347) (7,231,335) (2,829,142)
------------------- ------------------- ---------------- ----------------
Net increase (decrease)
in shares outstanding 981,752 2,842,432 (2,883,279) 3,199,177
------------------- ------------------- ---------------- ----------------
------------------- ------------------- ---------------- ----------------
</TABLE>
7. NET ASSETS
Net assets at October 31, 1995, consisted of the following:
<TABLE>
<CAPTION>
FIXED INCOME FUND GLOBAL FIXED INCOME FUND
---------------------------- ------------------------
<S> <C> <C>
Capital contributed, net $116,808,286 $ 63,963,915
Accumulated net investment income
(loss) (66,850) 1,917,795
Accumulated net realized gain
(loss) from security transactions (1,034,867) (1,533,335)
Net unrealized appreciation
(depreciation) from investments
and foreign currency related
items 1,276,339 (707,331)
---------------- ------------------------
Net assets $116,982,908 $ 63,641,044
---------------- ------------------------
---------------- ------------------------
</TABLE>
8. CAPITAL LOSS CARRYOVER
At October 31, 1995, capital loss carryovers available to offset possible
future capital gains of each Fund were as follows:
<TABLE>
<CAPTION>
Capital Loss Carryover Total Capital
Expiring In Loss Carryover
-------------------------- --------------
2002 2003
---------- ----------
<S> <C> <C> <C>
Fixed Income $1,034,867 $1,034,867
Global Fixed Income 653,329 1,284,612 1,937,941
32
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<CAPTION>
INTERMEDIATE GOVERNMENT FUND NEW YORK MUNICIPAL FUND
For the Year Ended October 31, For the Year Ended October 31,
---------------------------------------- ----------------------------------
1995 1994 1995 1994
------------------- ------------------- ---------------- ----------------
<C> <C> <C> <C>
2,723,498 2,426,890 3,181,012 4,835,896
230,993 538,360 299,821 328,635
(2,323,291) (5,159,908) (3,957,382) (4,178,180)
------------------- ------------------- ---------------- ----------------
631,200 (2,194,658) (476,549) 986,351
------------------- ------------------- ---------------- ----------------
------------------- ------------------- ---------------- ----------------
<CAPTION>
INTERMEDIATE GOVERNMENT FUND NEW YORK MUNICIPAL FUND
------------------------------------------ ---------------------------------
<C> <C>
$ 54,407,628 $ 70,580,636
(5,346) 0
458,837 818,908
1,036,784 1,961,933
--------------- ---------------
$ 55,897,903 $ 73,361,477
--------------- ---------------
--------------- ---------------
</TABLE>
33
- --------------------------------------------------------------------------------
<PAGE>C-1
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements relating to Common Shares.
(1) Financial Statements included in Part A:
(a) Financial Highlights
(2) Financial Statements included in Part B:
(a) Report of Coopers & Lybrand L.L.P., Independent
Accountants
(b) Statement of Net Assets
(c) Statement of Operations
(d) Statement of Changes in Net Assets
(e) Financial Highlights
(f) Notes to Financial Statements
(b) Exhibits:
Exhibit No. Description of Exhibit
- ----------- ----------------------
1(a) Articles of Incorporation.
(b) Amendment to Articles of Incorporation.
2 By-Laws.
3 Not applicable.
4 Form of Stock Certificates.(1)
5 Investment Advisory Agreement.
6 Form of Distribution Agreement.(2)
7 Not applicable.
- ------------------------
(1) Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in Pre-
Effective Amendment No. 2 to the Registration Statement of Warburg,
Pincus Post-Venture Capital Fund, Inc. filed on September 25, 1995
(Securities Act File No. 33-61225).
(2) Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in Post-
Effective Amendment No. 10 to the Registration Statement on Form N-1A
of Warburg, Pincus International Equity Fund, Inc. filed on September
22, 1995 (Securities Act File No. 33-27031).
<PAGE>C-2
8(a) Form of Custodian Agreement with PNC Bank,
as amended. (2)
(b) Form of Custodian Agreement with Fiduciary Trust Company
International, as amended.(2)
9(a) Form of Transfer Agency Agreement.(3)
(b) Form of Co-Administration Agreement with Counsellors
Funds Service, Inc. (3)
(b-1) Form of Co-Administration Agreement with PFPC Inc. (3)
(c) Forms of Services Agreements.(4)
10 Opinion and Consent of Willkie Farr & Gallagher, counsel
to the Fund.
11(a) Consent of Coopers & Lybrand L.L.P., Independent
Accountants.
(b) Consent of Ernst & Young LLP, Independent Accountants.
12 Not applicable.
13 Form of Purchase Agreement. (2)
14 Form of Retirement Plans.(5)
15(a) Shareholder Services Plan. (6)
- ------------------------
(3) Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in Pre-
Effective Amendment No. 1 to the Registration Statement on Form N-1A
of Warburg, Pincus Trust filed on June 14, 1995 (Securities Act File
No. 33-58125).
(4) Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in Pre-
Effective Amendment No. 1 to the Registration Statement on Form N-1A
of Warburg, Pincus Japan Growth Fund, Inc. filed on December 18, 1995
(Securities Act File No. 33-63653).
(5) Incorporated by reference to Post-Effective Amendment No. 1 to the
Registration Statement of Warburg, Pincus Managed Bond Trust, filed
on February 28, 1995 (Securities Act File No. 33-73672).
(6) Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in Post-
Effective Amendment No. 12 to the Registration Statement on Form N-1A
of Counsellors Cash Reserve Fund, Inc. filed on June 28, 1995
(Securities Act File No. 2-94840).
<PAGE>C-3
(b) Amended and Restated Distribution Plan. (4)
(c) Form of Rule 18f-3 Plan.(7)
16 Schedule for Computation of Total Return and Yield
Quotations relating to Common Shares.
17 Financial Data Schedule relating to Common Shares.
- ------------------------
(7) Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in Post-
Effective Amendment No. 13 to the Registration Statement on Form N-1A
of Warburg, Pincus International Equity Fund, Inc. filed on December
28, 1995 (Securities Act File No. 33-27031).
<PAGE>C-4
Item 25. Persons Controlled by or Under Common Control
with Registrant
Warburg, Pincus Counsellors, Inc. ("Warburg"), Registrant's
investment adviser, may be deemed a controlling person of Registrant because
it possesses or shares investment or voting power with respect to more than
25% of the outstanding securities of Registrant. E.M. Warburg, Pincus & Co.,
Inc. ("EMW") controls Warburg through its ownership of a class of voting
preferred stock of Warburg. John L. Furth, director of the Fund, and Lionel
I. Pincus, Chairman of the Board and Chief Executive Officer of EMW, may be
deemed to be controlling persons of the Fund because they may be deemed to
possess or share investment power over shares owned by clients of Warburg and
certain other entities.
Item 26. Number of Holders of Securities
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class As of December 28, 1995
-------------- ------------------------
<S> <C>
Shares of common stock, par value $.001 per share 706
Shares of common stock - Series 1, par value $.001 per share 0
Shares of common stock - Series 2 ("Advisor Shares"), par value 0
$.001 per share
</TABLE>
Item 27. Indemnification
Registrant, officers and directors or trustees of Warburg, of
Counsellors Securities Inc. ("Counsellors Securities") and of Registrant are
covered by insurance policies indemnifying them for liability incurred in
connection with the operation of Registrant. These policies provide insurance
for any "Wrongful Act" of an officer, director or trustee. Wrongful Act is
defined as breach of duty, neglect, error, misstatement, misleading statement,
omission or other act done or wrongfully attempted by an officer, Director or
Trustee in connection with the operation of Registrant. Insurance coverage
does not extend to (a) conflicts of interest or gaining in fact any profit or
advantage to which one is not legally entitled, (b) intentional non-compliance
with any statute or regulation or (c) commission of dishonest, fraudulent acts
or omissions. Insofar as it relates to Registrant, the coverage is limited in
amount and, in certain circumstances, is subject to a deductible.
Under Article VII of the Registrant's charter, no provision of the
charter shall be effective to protect or purport to protect any director or
officer of the Registrant against any liability to the Registrant or its
security holders to which he would otherwise be subject
<PAGE>C-5
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
Under Article V, Sections 1 and 2, of Registrant's By-Laws, any past
or present director or officer of Registrant will be indemnified to the
fullest extent permitted by law against liability and all expenses reasonably
incurred by him in connection with any action, suit or proceeding to which he
may be a part or otherwise involved by reason of his being or having been a
director or officer of Registrant. This provision does not authorize
indemnification when it is determined, in the manner specified in the By-Laws,
that the director or officer would otherwise be liable to Registrant or its
shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of his duties ("disqualifying conduct"). Expenses of a
director or officer may be paid by Registrant in advance of the final
disposition of any action, suit or proceeding upon the satisfaction of certain
conditions including receipt of any undertaking by the director or officer to
repay the expenses to Registrant in the event that it is ultimately determined
that indemnification of the expenses is not authorized under the charter and
upon the satisfaction of any other conditions set forth in Registrant's By-
Laws.
Under Article V, Section 6, of Registrant's By-laws, Registrant may
purchase insurance on behalf of a director, officer, employee or agent of
Registrant against liability arising out of his acting as such or while
serving in similar capacities in other entities at Registrant's request.
Registrant may not obtain insurance for liabilities arising out of
disqualifying conduct.
Registrant's Investment Advisory Agreement with Warburg and
Distribution Agreement with Counsellors Securities contain provisions designed
to protect certain persons from liability, as follows: Section 5 of the
Investment Advisory Agreement provides that Warburg will not be liable for any
error of judgment or mistake of law or for any loss suffered by Registrant in
connection with matters to which the Agreement relates, except that Warburg is
not protected from liability by reason of disqualifying conduct. Section 4 of
the Distribution agreement provides that Registrant will indemnify Counsellors
Securities and its officers, directors and control persons from liability
arising out of a misstatement or omission in Registrant's Registration
Statement, other than liability arising out of statements made by Counsellors
Securities and liability arising out of disqualifying conduct.
Insofar as indemnification for liability arising under the
Securities Act of 1933, as amended (the "Act"), may be permitted to directors,
officers and controlling persons of Registrant pursuant to the foregoing
provisions, or otherwise, Registrant has been advised that in the opinion of
the Securities and Exchange Commission ("SEC") such indemnification is against
public policy as expressed in the act and is,
<PAGE>C-6
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant of expenses
incurred or paid by a director, officer or controlling person of Registrant in
the successful defense of any action suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
Item 28. Business and Other Connections of
Investment Adviser
Warburg, a wholly owned subsidiary of Warburg, Pincus Counsellors
G.P., acts as investment adviser to Registrant. Warburg renders investment
advice to a wide variety of individual and institutional clients. The list
required by this Item 28 of officers and directors of Warburg, together with
information as to their other business, profession, vocation or employment of
a substantial nature during the past two years, is incorporated by reference
to Schedules A and D of Form ADV filed by Warburg (SEC File No. 801-07321).
Item 29. Principal Underwriter
(a) Counsellors Securities acts as distributor for Registrant, as
well as for The RBB Fund, Inc., Warburg Pincus Capital Appreciation Fund,
Warburg Pincus Cash Reserve Fund, Warburg Pincus Emerging Growth Fund, Warburg
Pincus Emerging Markets Fund, Warburg Pincus Fixed Income Fund, Warburg Pincus
Institutional Fund, Inc., Warburg Pincus Intermediate Maturity Government
Fund, Warburg Pincus International Equity Fund, Warburg Pincus Japan Growth
Fund, Warburg Pincus Japan OTC Fund, Warburg Pincus New York Intermediate
Municipal Fund, Warburg Pincus Post-Venture Capital Fund, Warburg Pincus New
York Tax Exempt Fund, Warburg Pincus Short-Term Tax-Advantaged Bond Fund,
Warburg Pincus Small Company Value Fund and Warburg Pincus Trust.
(b) For information relating to each director, officer or partner
of Counsellors Securities, reference is made to Form BD (SEC File No. 8-32482)
filed by Counsellors Securities under the Securities Exchange Act of 1934.
Item 30. Location of Accounts and Records
(1) Warburg, Pincus Global Fixed Income Fund
466 Lexington Avenue
New York, New York 10017-3147
(Fund's Articles of Incorporation, by-laws and minute books)
<PAGE>C-7
(2) State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
(records relating to its functions as transfer agent and
dividend disbursing agent)
(3) PFPC Inc.
103 Bellevue Parkway
Wilmington, Delaware 19809
(records relating to its functions as co-administrator)
(4) Counsellors Funds Service, Inc.
466 Lexington Avenue
New York, New York 10017-3147
(records relating to its functions as co-administrator)
(5) PNC Bank, National Association
Broad and Chestnut Streets
Philadelphia, Pennsylvania 19101
(records relating to its functions as custodian)
(6) Fiduciary Trust Company International
Two World Trade Center
New York, New York 10048
(7) Counsellors Securities Inc.
466 Lexington Avenue
New York, New York 10017-3147
(records relating to its functions as distributor)
(8) Warburg, Pincus Counsellors, Inc.
466 Lexington Avenue
New York, New York 10017-3147
(records relating to its functions as investment adviser)
Item 31. Management Services
Not applicable
Item 32. Undertakings.
(a) Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of Registrant's latest annual report to
shareholders, upon request and without charge.
(b) Registrant hereby undertakes to call a meeting of its
shareholders for the purpose of voting upon the question of removal of a
director or directors of Registrant when requested in writing to do so by the
holders of at least 10% of Registrant's outstanding shares. Registrant
<PAGE>C-8
undertakes further, in connection with the meeting, to comply with the
provisions of Section 16(c) of the 1940 Act relating to communications with
the shareholders of certain common-law trusts.
<PAGE>C-9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York and the State of New York, on the 11th day of January,
1995.
WARBURG, PINCUS GLOBAL FIXED
INCOME FUND, INC.
By:/s/ Dale C. Christensen
Dale C. Christensen
President
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Amendment has been signed below by the following persons in the
capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ Lionel I. Pincus Chairman of the Board January 11, 1996
Lionel I. Pincus and Director
/s/ John L. Furth Chief Executive January 11, 1996
John L. Furth Officer and Director
/s/ Dale C. Christensen President January 11, 1996
Dale C. Christensen
/s/ Reuben S. Leibowitz Chief Financial January 11, 1996
Reuben S. Leibowitz Officer and Vice
President
/s/ Stephen Distler Treasurer and January 11, 1996
Stephen Distler Principal Accounting
Officer
/s/ Richard N. Cooper Director January 11, 1996
Richard N. Cooper
/s/ Donald J. Donahue Director January 11, 1996
Donald J. Donahue
/s/ Jack W. Fritz Director January 11, 1996
Jack W. Fritz
/s/ Thomas A. Melfe Director January 11, 1996
Thomas A. Melfe
/s/ Alexander B. Trowbridge Director January 11, 1996
Alexander B. Trowbridge
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
- ------- ----------------------
1(a) Articles of Incorporation.
(b) Amendment to Articles of Incorporation.
2 By-Laws.
3 Not applicable.
4 Form of Stock Certificates.(1)
5 Investment Advisory Agreement.
6 Form of Distribution Agreement.(2)
7 Not applicable.
8(a) Form of Custodian Agreement with PNC Bank,
as amended. (2)
(b) Form of Custodian Agreement with Fiduciary Trust Company
International, as amended. (2)
9(a) Form of Transfer Agency Agreement.(3)
(b) Form of Co-Administration Agreement with Counsellors Funds Service,
Inc. (3)
- ------------------------
(1)Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in Pre-
Effective Amendment No. 2 to the Registration Statement of Warburg, Pincus
Post-Venture Capital Fund, Inc. filed on September 25, 1995 (Securities
Act File No. 33-61225).
(2)Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in Post-
Effective Amendment No. 10 to the Registration Statement on Form N-1A of
Warburg, Pincus International Equity Fund, Inc. filed on September 22, 1995
(Securities Act File No. 33-27031).
(3)Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in Pre-
Effective Amendment No. 1 to the Registration Statement on Form N-
1A of Warburg, Pincus Trust filed on June 14, 1995 (Securities Act
File No. 33-58125).
<PAGE>
(b-1) Form of Co-Administration Agreement with PFPC Inc. (3)
(c) Forms of Services Agreements. (4)
10 Opinion and Consent of Willkie Farr & Gallagher, counsel to the
Fund.
11(a) Consent of Coopers & Lybrand L.L.P., Independent Accountants.
(b) Consent of Ernst & Young LLP, Independent Accountants.
12 Not applicable.
13 Form of Purchase Agreement. (2)
14 Form of Retirement Plans. (5)
15(a) Shareholder Services Plan. (6)
(b) Amended and Restated Distribution Plan. (4)
(c) Form of Rule 18f-3 Plan. (7)
16 Schedule for Computation of Total Return and Yield Quotations
relating to Common Shares.
17 Financial Data Schedule relating to Common Shares.
- ------------------------
(4)Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in Pre-
Effective Amendment No. 1 to the Registration Statement on Form N-1A of
Warburg, Pincus Japan Growth Fund, Inc. filed on December 18, 1995
(Securities Act File No. 33-63653).
(5)Incorporated by reference to Post-Effective Amendment No. 1 to the
Registration Statement of Warburg, Pincus Managed Bond Trust, filed on
February 28, 1995 (Securities Act File No. 33-73672).
(6)Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in
Post-Effective Amendment No. 12 to the Registration Statement on
Form N-1A of Counsellors Cash Reserve Fund, Inc. filed on June
28, 1995 (Securities Act File No. 2-94840).
(7)Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in Post-
Effective Amendment No. 13 to the Registration Statement on Form N-1A of
Warburg, Pincus International Equity Fund, Inc. filed on December 28,
1995 (Securities Act File No. 33-27031).
<PAGE>1
ARTICLES OF INCORPORATION
OF
COUNSELLORS GLOBAL FIXED INCOME FUND, INC.
ARTICLE I
The undersigned, Abby L. Ingber, whose post office address is c/o
Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd Street, New York,
New York 10022, being at least 18 years of age, does hereby act as an
incorporator and forms a corporation, under and by virtue of the Maryland
General Corporation Law.
ARTICLE II
NAME
The name of the Corporation is Counsellors Global Fixed Income Fund,
Inc.
ARTICLE III
PURPOSES AND POWERS
The Corporation is formed for the following purposes:
(1) To conduct and carry on the business of an investment company.
(2) To hold, invest and reinvest its assets in securities and other
investments or to hold part or all of its assets in cash.
(3) To issue and sell shares of its capital stock in such amounts
and on such terms and conditions and for such purposes and for such amount or
kind of consideration as may now or hereafter be permitted by law.
(4) To redeem, purchase or acquire in any other manner, hold,
dispose of, resell, transfer, reissue or cancel (all without the vote or
consent of the stockholders of the Corporation) shares of its capital stock,
in any manner and to the extent now or hereafter permitted by law and by these
Articles of Incorporation.
(5) To do any and all additional acts and to exercise any and all
additional powers or rights as may be necessary, incidental, appropriate or
desirable for the accomplishment of all or any of the foregoing purposes.
<PAGE>2
The Corporation shall be authorized to exercise and enjoy all of the
powers, rights and privileges granted to, or conferred upon, corporations by
the Maryland General Corporation Law now or hereafter in force, and the
enumeration of the foregoing shall not be deemed to exclude any powers, rights
or privileges so granted or conferred.
ARTICLE IV
PRINCIPAL OFFICE AND RESIDENT AGENT
The post office address of the principal office of the Corporation in
the State of Maryland is c/o The Corporation Trust Company Incorporated, 32
South Street, Baltimore, Maryland, 21201. The name and address of the
resident agent of the Corporation in the State of Maryland is The Corporation
Trust Company Incorporated, a Maryland Corporation, 32 South Street,
Baltimore, Maryland 21202.
ARTICLE V
CAPITAL STOCK
(1) The total number of shares of capital stock that the Corporation
shall have authority to issue is three billion (3,000,000,000) shares, of the
par value of one tenth of one cent ($.001) per share and of the aggregate par
value of three million dollars ($3,000,000), all of which three billion
(3,000,000,000) shares are designated Common Stock.
(2) Any fractional share shall carry proportionately the rights of a
whole share including, without limitation, the right to vote and the right to
receive dividends. A fractional share shall not, however, have the right to
receive a certificate evidencing it.
(3) All persons who shall acquire stock in the Corporation shall
acquire the same subject to the provisions of this Charter and the By-Laws of
the Corporation.
(4) No holder of stock of the Corporation by virtue of being such a
holder shall have any right to purchase or subscribe for any shares of the
Corporation's capital stock or any other security that the Corporation may
issue or sell (whether out of the number of shares authorized by this Charter
or out of any shares of the Corporation's capital stock that the Corporation
may acquire) other than a right that the Board of Directors in its discretion
may determine to grant.
<PAGE>3
(5) The Board of Directors shall have authority by resolution to
classify and reclassify any authorized but unissued shares of capital stock
from time to time by setting or changing in any one or more respects the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications or terms or conditions of
redemption of the capital stock.
(6) Notwithstanding any provision of law requiring any action to be
taken or authorized by the affirmative vote of a greater proportion of the
votes of all classes or of any class of stock of the Corporation, such action
shall be effective and valid if taken or authorized by the affirmative vote of
a majority of the total number of votes entitled to be cast thereon, except as
otherwise provided in this Charter.
ARTICLE VI
REDEMPTION
Each holder of shares of the Corporation's capital stock shall be
entitled to require the Corporation to redeem all or any part of the shares of
capital stock of the Corporation standing in the name of the holder on the
books of the Corporation, and all shares of capital stock issued by the
Corporation shall be subject to redemption by the Corporation, at the
redemption price of the shares as in effect from time to time as may be
determined by or pursuant to the direction of the Board of Directors of the
Corporation in accordance with the provisions of Article VI, subject to the
right of the Board of Directors of the Corporation to suspend the right of
redemption or postpone the date of payment of the redemption price in
accordance with provisions of applicable law. Without limiting the generality
of the foregoing, the Corporation shall, to the extent permitted by applicable
law, have the right at any time to redeem the shares owned by any holder of
capital stock of the Corporation (i) if the redemption is, in the opinion of
the Board of Directors of the Corporation, desirable in order to prevent the
Corporation from being deemed a "personal holding company" within the meaning
of the Internal Revenue Code of 1986 or (ii) if the value of the shares in the
account maintained by the Corporation or its transfer agent for any class of
stock for the stockholder is $10,000 (ten thousand dollars) or less and the
stockholder has been given at least 60 (sixty) days' written notice of the
redemption and has failed to make additional purchases of shares in an amount
sufficient to bring the value in his account to $10,000 (ten thousand dollars)
or more before the redemption is effected by the Corporation. Payment of the
redemption price shall be made in cash by the Corporation at the time and in
the manner as may be determined from time to time by the Board of
<PAGE>4
Directors of the Corporation unless, in the opinion of the Board of Directors,
which shall be conclusive, conditions exist that make payment wholly in cash
unwise or undesirable; in such event the Corporation may make payment wholly
or partly by securities or other property included in the assets belonging or
allocable to the class of the shares redemption of which is being sought, the
value of which shall be determined as provided herein. The Board of Directors
may establish procedures for redemption of shares.
ARTICLE VII
BOARD OF DIRECTORS
(1) The number of directors constituting the Board of Directors
shall be one (1) or such other number as may be set forth in the By-laws or
determined by the Board of Directors pursuant to the By-laws. The number of
Directors shall at no time be less than the minimum number required under the
Maryland General Corporation Law. Dale C. Christensen has been appointed
director of the Corporation to hold office until the first annual meeting of
stockholders or until his successor is elected and qualified.
(2) In furtherance, and not in limitation, of the powers conferred
by the laws of the State of Maryland, the Board of Directors is expressly
authorized:
(i) To make, alter or repeal the By-Laws of the Corporation, except where
such power is reserved by the By-Laws to the stockholders, and except as
otherwise required by the Investment Company Act of 1940, as amended.
(ii) From time to time to determine whether and to what extent and at what
times and places and under what conditions and regulations the books and
accounts of the Corporation, or any of them other than the stock ledger, shall
be open to the inspection of the stockholders. No stockholder shall have any
right to inspect any account or book or document of the Corporation,
except as conferred by law or authorized by resolution of the Board of
Directors or of the stockholders.
(iii) Without the assent or vote of the stockholders, to authorize the
issuance from time to time of shares of the stock of any class of the
Corporation, whether now or hereafter authorized, and securities convertible
into shares of stock of the Corporation of any class or classes, whether now
or hereafter authorized, for such consideration as the Board of Directors may
deem advisable.
<PAGE>5
(iv) Without the assent or vote of the stockholders, to authorize and issue
obligations of the Corporation, secured and unsecured, as the Board of
Directors may determine, and to authorize and cause to be executed mortgages
and liens upon the real or personal property of the Corporation.
(v) Notwithstanding anything in this Charter to the contrary, to establish in
its absolute discretion the basis or method for determining the value of the
assets belonging to any class, the value of the liabilities belonging to any
class and the net asset value of each share of any class of the Corporation's
stock.
(vi) To determine in accordance with generally accepted accounting principles
and practices what constitutes net profits, earnings, surplus or net assets in
excess of capital, and to determine what accounting periods shall be used by
the Corporation for any purpose; to set apart out of any funds of the
Corporation reserves for such purposes as it shall determine and to abolish
the same; to declare and pay any dividends and distributions in cash,
securities or other property from surplus or any funds legally available
therefor, at such intervals as it shall determine; to declare dividends or
distributions by means of a formula or other method of determination, at
meetings held less frequently than the frequency of the effectiveness of such
declarations; and to establish payment dates for dividends or any other
distributions on any basis, including dates occurring less frequently than the
effectiveness of declarations thereof.
(vii) In addition to the powers and authorities granted herein and by statute
expressly conferred upon it, the Board of Directors is authorized to exercise
all powers and do all acts that may be exercised or done by the Corporation
pursuant to the provisions of the laws of the State of Maryland, this Charter
and the By-Laws of the Corporation.
(3) Any determination made in good faith, and in accordance with
accepted accounting practices, if applicable, by or pursuant to the direction
of the Board of Directors, with respect to the amount of assets, obligations
or liabilities of the Corporation, as to the amount of net income of the
Corporation from dividends and interest for any period or amounts at any time
legally available for the payment of dividends, as to the amount of any
reserves or charges set up and the propriety thereof, as to the time of or
purpose for creating reserves or as to the use, alteration or cancellation of
any reserves or charges (whether or not any obligation or liability for which
the reserves or charges have been created has been paid or discharged or is
then or thereafter required to be paid or discharged), as to the value of any
security owned by the Corporation, the determination of the net asset value
of shares of any class of
<PAGE>6
the Corporation's capital stock, or as to any other matters relating to the
issuance, sale or other acquisition or disposition of securities or shares of
capital stock of the Corporation, and any reasonable determination made in
good faith by the Board of Directors whether any transaction constitutes a
purchase of securities on "margin," a sale of securities "short," or an
underwriting of the sale of, or a participation in any underwriting or selling
group in connection with the public distribution of, any securities, shall be
final and conclusive, and shall be binding upon the Corporation and all
holders of its capital stock, past, present and future, and shares of the
capital stock of the Corporation are issued and sold on the condition and
understanding, evidenced by the purchase of shares of capital stock or
acceptance of share certificates, that any and all such determinations shall
be binding as aforesaid. No provision of this Charter of the Corporation
shall be effective to (i) require a waiver of compliance with any provision of
the Securities Act of 1933, as amended, or the Investment Company Act of 1940,
as amended, or of any valid rule, regulation or order of the Securities and
Exchange Commission under those Acts or (ii) protect or purport to protect any
director or officer of the Corporation against any liability to the
Corporation or its security holders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
ARTICLE VIII
AMENDMENTS
The Corporation reserves the right from time to time to make any
amendment to its Charter, now or hereafter authorized by law, including any
amendment that alters the contract rights, as expressly set forth in this
Charter, of any outstanding stock.
* * *
IN WITNESS WHEREOF, I have adopted and signed these Articles of
Incorporation and do hereby acknowledge that the adoption and signing are my
act.
By:/s/Abby Ingber
Incorporator
Dated the 6th day of July, 1990
<PAGE>1
ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
COUNSELLORS GLOBAL FIXED INCOME FUND, INC.
EUGENE P. GRACE and KAREN AMATO, being Vice President and Secretary
and Assistant Secretary, respectively, of COUNSELLORS GLOBAL FIXED INCOME
FUND, INC. (the "Corporation"), a corporation organized and existing under and
by virtue of the Maryland Corporation Law, DO HEREBY CERTIFY:
FIRST: That the Board of Directors of the Corporation by the
unanimous written consent of its members filed with the minutes of the board,
adopted a resolution proposing and declaring advisable the following amendment
to the Articles of Incorporation of the Corporation:
RESOLVED, that the name of the Fund listed below be, and hereby is,
changed as follows:
Current Name Proposed Name
Counsellors Global Fixed Warburg, Pincus Global Fixed
Income Fund, Inc. Income Fund, Inc.
and that the officers of the Fund, or their designees, be, and hereby are,
authorized and directed to execute and file Articles of Amendment to the
Fund's Articles of Incorporation and to do any and all such other lawful acts
as may be necessary or appropriate to perform and carry out the name change.
SECOND: That the amendment is limited to a change expressly
permitted by 2-605 of the Maryland General Corporation Law to be made
without action by the stockholders and that the Corporation is registered as
an open-end company under the Investment Company Act of 1940.
<PAGE>2
IN WITNESS WHEREOF, the undersigned have executed these Articles of
Amendment and do hereby acknowledge that it is the act and deed of each of
them and, under penalty of perjury, to the best of the knowledge, information
and belief of each of them, the matters and facts contained herein are true in
all material respects.
DATE: October 27, 1995 /s/ Eugene P. Grace
Eugene P. Grace
Vice President and Secretary
ATTEST:
/s/ Karen Amato
Karen Amato
Assistant Secretary
<PAGE>1
BY-LAWS
OF
COUNSELLORS GLOBAL FIXED INCOME FUND, INC.
A Maryland Corporation
ARTICLE I
STOCKHOLDERS
SECTION 1. Annual Meetings. No annual meeting of the stockholders
of the Corporation shall be held in any year in which the election or
directors is not required to be acted upon under the Investment Company Act of
1940, as amended unless otherwise determined by the Board of Directors. An
annual meeting may be held at any place within the United States as may be
determined by the Board of Directors and as shall be designated in the notice
of the meeting, and at the time specified by the Board of Directors. Any
business of the Corporation may be transacted at an annual meeting without
being specifically designated in the notice unless otherwise provided by
statute, the Corporation's Articles of Incorporation or these By-Laws.
SECTION 2. Special Meetings. Special meetings of the stockholders
for any purpose or purposes, unless otherwise prescribed by statute or by the
Corporation's Articles of Incorporation, may be held at any place within the
United States, and may be called at any time by the Board of Directors or by
the President, and shall be called by the President or Secretary at the
request in writing of a majority of the Board of Directors or at the request
in writing of stockholders entitled to cast at least 10 (ten) percent of the
votes entitled to be cast at the meeting upon payment by such stockholders to
the Corporation of the reasonably estimated cost of preparing and mailing a
notice of the meeting (which estimated cost shall be provided to such
stockholders by the Secretary of the Corporation). Notwithstanding the
foregoing, unless requested by stockholders entitled to cast a majority of
the votes entitled to be cast at the meeting, a special meeting of the
stockholders need not be called at the request of stockholders to consider any
matter which is substantially the same as a matter voted on at any special
meeting of the stockholders held during the preceding 12 (twelve) months. A
written request shall state the purpose or purposes of the proposed meeting.
SECTION 3. Notice of Meetings. Written or printed
<PAGE>2
notice of the purpose or purposes and of the time and place of every meeting
of the stockholders shall be given by the Secretary of the Corporation to each
stockholder of record entitled to vote at the meeting, by placing the notice
in the mail at least 10 (ten) days, but not more than 90 (ninety) days, prior
to the date designated for the meeting addressed to each stockholder at his
address appearing on the books of the Corporation or supplied by the
stockholder to the Corporation for the purpose of notice. The notice of any
meeting of stockholders may be accompanied by a form of proxy approved by the
Board of Directors in favor of the actions or persons as the Board of
Directors may select. Notice of any meeting of stockholders shall be deemed
waived by any stockholder who attends the meeting in person or by proxy, or
who before or after the meeting submits a signed waiver of notice that is
filed with the records of the meeting.
SECTION 4. Quorum. Except as otherwise provided by statute or by
the Corporation's Articles of Incorporation, the presence in person or by
proxy of stockholders of the Corporation entitled to cast at least a majority
of the votes to be cast shall constitute a quorum at each meeting of the
stockholders and all questions shall be decided by majority vote of the shares
so represented in person or by proxy at the meeting and entitled to vote. In
the absence of a quorum, the stockholders present in person or by proxy, by
majority vote and without notice other than by announcement, may adjourn the
meeting from time to time as provided in Section 5 of this Article I until a
quorum shall attend. The stockholders present at any duly organized meeting
may continue to do business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum. The absence from any
meeting in person or by proxy of holders of the number of shares of stock of
the Corporation in excess of a majority that may be required by the laws of
the State of Maryland, the Investment Company Act of 1940, as amended, or
other applicable statute, the Corporation's Articles of Incorporation or these
By-Laws, for action upon any given matter shall not prevent action at the
meeting on any other matter or matters that may properly come before the
meeting, so long as there are present, in person or by proxy, holders of the
number of shares of stock of the Corporation required for action upon the
other matter or matters.
SECTION 5. Adjournment. Any meeting of the stockholders may be
adjourned from time to time, without notice other than by announcement at the
meeting at which the adjournment is taken. At any adjourned meeting at which
a quorum shall be present any action may be taken that could have been taken
at the meeting originally called. A meeting of the stockholders may not be
adjourned to a date more than 120 (one hundred twenty) days after the original
record date.
<PAGE>3
SECTION 6. Organization. At every meeting of the stockholders, the
Chairman of the Board, or in his absence or inability to act, the President,
or in his absence or inability to act, a Vice President, or in the absence or
inability to act of the Chairman of the Board, the President and all the Vice
Presidents, a chairman chosen by the stockholders, shall act as Chairman of
the meeting. The Secretary, or in his absence or inability to act, a person
appointed by the chairman of the meeting, shall act as secretary of the
meeting and keep the minutes of the meeting.
SECTION 7. Order of Business. The order of business at all meetings
of the stockholders shall be as determined by the chairman of the meeting.
SECTION 8. Voting. Except as otherwise provided by statute or the
Corporation's Articles of Incorporation, each holder of record of shares of
stock of the Corporation having voting power shall be entitled at each meeting
of the stockholders to one vote for every share of stock standing in his name
on the records of the Corporation as of the record date determined pursuant to
Section 9 of this Article I.
Each stockholder entitled to vote at any meeting of stockholders may
authorize another person or persons to act for him by a proxy signed by the
stockholder or his attorney-in-fact. No proxy shall be valid after the
expiration of eleven months from the date thereof, unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the
stockholder executing it, except in those cases in which the proxy states
that it is irrevocable and in which an irrevocable proxy is permitted by law.
If a vote shall be taken on any question other than the election of
directors, which shall be by written ballot, then unless required by statute
or these By-Laws, or determined by the chairman of the meeting to be
advisable, any such vote need not be by ballot. On a vote by ballot, each
ballot shall be signed by the stockholder voting, or by his proxy, and shall
state the number of shares voted.
SECTION 9. Fixing of Record Date. The Board of Directors may set a
record date for the purpose of determining stockholders entitled to vote at
any meeting of the stockholders. The record date for a particular meeting
shall be not more than 90 (ninety) nor fewer than 10 (ten) days before the
date of the meeting. All persons who were holders of record of shares as of
the record date of a meeting, and no others, shall be entitled to vote at such
meeting and any adjournment thereof.
SECTION 10. Inspectors. The Board of Directors may, in
<PAGE>4
advance of any meeting of stockholders, appoint one or more inspectors to act
at the meeting or at any adjournment of the meeting. If the inspectors shall
not be so appointed or if any of them shall fail to appear or act, the
chairman of the meeting may, and on the request of any stockholder entitled to
vote at the meeting shall, appoint inspectors. Each inspector, before
entering upon the discharge of his duties, shall take and sign an oath to
execute faithfully the duties of inspector at the meeting with strict
impartiality and according to the best of his ability. The inspectors shall
determine the number of shares outstanding and the voting power of each share,
the number of shares represented at the meeting, the existence of a quorum and
the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do those acts as are proper to conduct
the election or vote with fairness to all stockholders. On request of the
chairman of the meeting or any stockholder entitled to vote at the meeting,
the inspectors shall make a report in writing of any challenge, request or
matter determined by them and shall execute a certificate of any fact found by
them. No director or candidate for the office of director shall act as
inspector of an election of directors. Inspectors need not be stockholders of
the Corporation.
SECTION 11. Consent of Stockholders in Lieu of Meeting. Except as
otherwise provided by statute or the Corporation's Articles of Incorporation,
any action required to be taken at any meeting of stockholders, or any action
that may be taken at any meeting of the stockholders, may be taken without a
meeting, without prior notice and without a vote, if the following are filed
with the records of stockholders' meetings: (i) a unanimous written consent
that sets forth the action and is signed by each stockholder entitled to vote
on the matter and (ii) a written waiver of any right to dissent signed by each
stockholder entitled to notice of the meeting but not entitled to vote at the
meeting.
SECTION 12. Notice of Stockholder Business.
(a) At any Annual or Special Meeting of the Stockholders, only such
business shall be conducted as shall have been properly brought before the
meeting. To be properly brought before an Annual or Special Meeting business
must be (A) (i) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors, (ii)
otherwise properly brought before the meeting by or at the direction of the
Board of Directors, or (iii) subject to the provisions of Section 13 of this
Article I, otherwise properly brought before the meeting by a Stockholder and
(B) a proper subject under applicable law for Stockholder action.
<PAGE>5
(b) For business to be properly brought before an Annual or Special
Meeting by a Stockholder, the Stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation. To be timely, any
such notice must be delivered to or mailed and received at the principal
executive offices of the Corporation not later than 60 days prior to the date
of the meeting; provided, however, that if less than 70 days' notice or prior
public disclosure of the date of the meeting is given or made to Stockholders,
any such notice by a Stockholder to be timely must be so received not later
than the close of business on the 10th day following the day on which notice
of the date of the Annual or Special Meeting was given or such public
disclosure was made.
(c) Any such notice by a Stockholder shall set forth as to each
matter the Stockholder proposes to bring before the Annual or Special Meeting
(i) a brief description of the business desired to be brought before the
Annual or Special Meeting and the reasons for conducting such business at the
Annual or Special Meeting, (ii) the name and address, as they appear on the
Corporation's books, of the Stockholder proposing such business, (iii) the
class and number of shares of the capital stock of the Corporation which are
beneficially owned by the Stockholder, and (iv) any material interest of the
Stockholder in such business.
(d) Notwithstanding anything in the By-Laws to the contrary, no
business shall be conducted at any Annual or Special Meeting except in
accordance with the procedures set forth in this Section 12. The Chairman of
the Annual or Special Meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the
meeting and in accordance with the provisions of this Section 12, and if he
should so determine, he shall so declare to the meeting and any such business
not properly brought before the meeting shall not be considered or transacted.
SECTION 13. Stockholder Business not Eligible for Consideration.
(a) Notwithstanding anything in these By-Laws to the contrary, any
proposal that is otherwise properly brought before an Annual or Special
Meeting by a Stockholder will not be eligible for consideration by the
Stockholders at such Annual or Special Meeting if such proposal is
substantially the same as a matter properly brought before such Annual or
Special Meeting by or at the direction of the Board of Directors of the
Corporation. The Chairman of such Annual or Special Meeting shall, if the
facts warrant, determine and declare that a Stockholder proposal is
substantially the same as a matter properly brought before the meeting by or
at the direction of the Board of Directors, and, if he should so determine, he
shall so declare to the meeting and any
<PAGE>6
such Stockholder proposal shall not be considered at the meeting.
(b) This Section 13 shall not be construed or applied to make
ineligible for consideration by the Stockholders at any Annual or Special
Meeting any Stockholder proposal required to be included in the Corporation's
proxy statement relating to such meeting pursuant to Rule 14a-8 under the
Securities Exchange Act of 1934, or any successor rule thereto.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. General Powers. Except as otherwise provided in the
Corporation's Articles of Incorporation, the business and affairs of the
Corporation shall be managed under the direction of the Board of Directors.
All powers of the Corporation may be exercised by or under authority of the
Board of Directors except as conferred on or reserved to the stockholders by
law, by the Corporation's Articles of Incorporation or by these By-Laws.
SECTION 2. Number of Directors. The number of directors shall he
fixed from time to time by resolution of the Board of Directors adopted by a
majority of the Directors then in office; provided, however, that the number
of directors shall in no event be fewer than one nor more than fifteen. Any
vacancy created by an increase in Directors may be filled in accordance with
Section 6 of this Article II. No reduction in the number of directors shall
have the effect of removing any director from office prior to the expiration
of his term unless the director is specifically removed pursuant to Section 5
of this Article II at the time of the decrease. A director need not be a
stockholder of the Corporation, a citizen of the United States or a resident
of the State of Maryland.
SECTION 3. Election and Term of Directors. The term of office of
each director shall be from the time of his election and qualification until
his successor shall have been elected and shall have qualified, or until his
death, or until he shall have resigned or have been removed as provided in
these By-laws, or as otherwise provided by statute or the Corporation's
Articles of Incorporation.
SECTION 3.1 Director Nominations.
(a) Only persons who are nominated in accordance with the procedures
set forth in this Section 3.1 shall be eligible for election or re-election as
Directors. Nominations of persons for election or re-election to the Board of
Directors of the Corporation may be made at a meeting of Stockholders by or at
the
<PAGE>7
direction of the Board of Directors or by any Stockholder of the Corporation
who is entitled to vote for the election of such nominee at the meeting and
who complies with the notice procedures set forth in this Section 3.1.
(b) Such nominations, other than those made by or at the direction
of the Board of Directors, shall be made pursuant to timely notice delivered
in writing to the Secretary of the Corporation. To be timely, any such notice
by a Stockholder must be delivered to or mailed and received at the principal
executive offices of the Corporation not later than 60 days prior to the
meeting; provided, however, that if less than 70 days' notice or prior public
disclosure of the date of the meeting is given or made to Stockholders, any
such notice by a Stockholder to be timely must be so received not later than
the close of business on the 10th day following the day on which notice of the
date of the meeting was given or such public disclosure was made.
(c) Any such notice by a Stockholder shall set forth (i) as to each
person whom the Stockholder proposes to nominate for election or re-election
as a Director, (A) the name, age, business address and residence address of
such person, (B) the principal occupation or employment of such person, (C)
the class and number of shares of the capital stock of the Corporation which
are beneficially owned by such person and (D) any other information relating
to such person that is required to be disclosed in solicitations of proxies
for the election of Directors pursuant to Regulation 14A under the Securities
Exchange Act of 1934 or any successor regulation thereto (including without
limitation such persons' written consent to being named in the proxy statement
as a nominee and to serving as a Director if elected and whether any person
intends to seek reimbursement from the Corporation of the expenses of any
solicitation of proxies should such person be elected a Director of the
Corporation); and (ii) as to the Stockholder giving the notice (A) the name
and address, as they appear on the Corporation's books, of such Stockholder
and (B) the class and number of shares of the capital stock of the Corporation
which are beneficially owned by such Stockholder. At the request of the Board
of Directors any person nominated by the Board of Directors for election as a
Director shall furnish to the Secretary of the Corporation that information
required to be set forth in a Stockholder's notice of nomination which
pertains to the nominee.
(d) If a notice by a Stockholder is required to be given pursuant to
this Section 3.1, no person shall be entitled to receive reimbursement from
the Corporation of the expenses of a solicitation of proxies for the election
as a Director of a person named in such notice unless such notice states that
such reimbursement will be sought from the Corporation. No person shall be
eligible for election as a Director of the Corporation
<PAGE>8
unless nominated in accordance with the procedures set forth in this Section
3.1. The Chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
procedures prescribed by the By-Laws, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be disregarded
for all purposes.
SECTION 4. Resignation. A director of the Corporation may resign at
any time by giving written notice of his resignation to the Board of Directors
or the Chairman of the Board or to the President or the Secretary of the
Corporation. Any resignation shall take effect at the time specified in it
or, should the time when it is to become effective not be specified in it,
immediately upon its receipt. Acceptance of a resignation shall not be
necessary to make it effective unless the resignation states otherwise.
SECTION 5. Removal of Directors. Any director of the Corporation
may be removed by the stockholders with or without cause at any time by a vote
of a majority of the votes entitled to be cast for the election of directors.
SECTION 6. Vacancies. Subject to the provisions of the Investment
Company Act of 1940, as amended, any vacancies in the Board of Directors,
whether arising from death, resignation, removal or any other cause except an
increase in the number of directors, shall be filled by a vote of the majority
of the Board of Directors then in office even though that majority is less
than a quorum, provided that no vacancy or vacancies shall be filled by action
of the remaining directors if, after the filling of the vacancy or vacancies,
fewer than two-thirds of the directors then holding office shall have been
elected by the stockholders of the Corporation. A majority of the entire
Board may fill a vacancy which results from an increase in the number of
directors. In the event that at any time a vacancy exists in any office of a
director that may not be filled by the remaining directors, a special meeting
of the stockholders shall be held as promptly as possible and in any event
within 60 (sixty) days, for the purpose of filling the vacancy or vacancies.
Any director elected or appointed to fill a vacancy shall hold office until a
successor has been chosen and qualifies or until his earlier resignation or
removal.
SECTION 7. Place of Meetings. Meetings of the Board may be held at
any place that the Board of Directors may from time to time determine or that
is specified in the notice of the meeting.
SECTION 8. Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at the time and place determined by the
Board of Directors.
<PAGE>9
SECTION 9. Special Meetings. Special meetings of the Board of
Directors may be called by two or more directors of the Corporation or by the
Chairman of the Board or the President.
SECTION 10. Notice of Special Meetings. Notice of each special
meeting of the Board of Directors shall be given by the Secretary as
hereinafter provided. Each notice shall state the time and place of the
meeting and shall be delivered to each director, either personally or by
telephone or other standard form of telecommunication, at least 24
(twenty-four) hours before the time at which the meeting is to be held, or by
first-class mail, postage prepaid, addressed to the director at his residence
or usual place of business, and mailed at least 3 (three) days before the day
on which the meeting is to be held.
SECTION 11. Waiver of Notice of Meetings. Notice of any special
meeting need not be given to any director who shall, either before or after
the meeting, sign a written waiver of notice that is filed with the records of
the meeting or who shall attend the meeting.
SECTION 12. Quorum and Voting. One-third (but not fewer than 1
(one)) of the members of the entire Board of Directors shall be present in
person at any meeting of the Board in order to constitute a quorum for the
transaction of business at the meeting, and except as otherwise expressly
required by statute, the Corporation's Articles of Incorporation, these
By-Laws, the Investment Company Act of 1940, as amended, or any other
applicable statute, the act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the Board. In the
absence of a quorum at any meeting of the Board, a majority of the directors
present may adjourn the meeting to another time and place until a quorum shall
be present. Notice of the time and place of any adjourned meeting shall be
given to the directors who were not present at the time of the adjournment
and, unless the time and place were announced at the meeting at which the
adjournment was taken, to the other directors. At any adjourned meeting at
which a quorum is present, any business may be transacted that might have been
transacted at the meeting as originally called.
SECTION 13. Organization. The Board of Directors may, by resolution
adopted by a majority of the entire Board, designate a Chairman of the Board,
who shall preside at each meeting of the Board. In the absence or inability
of the Chairman of the Board to act, the President, or, in his absence or
inability to act, another director chosen by a majority of the directors
present, shall act as chairman of the meeting and preside at the meeting. The
Secretary, or, in his absence or inability to act, any person appointed by the
chairman, shall act as secretary of the meeting and keep the minutes thereof.
<PAGE>10
SECTION 14. Committees. The Board of Directors may designate one or
more committees of the Board of Directors, each consisting of 2 (two) or more
directors. To the extent provided in the resolution, and permitted by law,
the committee or committees shall have and may exercise the powers of the
Board of Directors in the management of the business and affairs of the
Corporation and may authorize the seal of the Corporation to be affixed to all
papers that may require it. Any committee or committees shall have the name
or names determined from time to time by resolution adopted by the Board of
Directors. Each committee shall keep regular minutes of its meetings and
report the same to the Board of Directors when required. The members of a
committee present at any meeting, whether or not they constitute a quorum,
may appoint a director to act in the place of an absent member.
SECTION 15. Written Consent of Directors in Lieu of a Meeting.
Subject to the provisions of the Investment Company Act of 1940, as amended,
any action required or permitted to be taken at any meeting of the Board of
Directors or of any committee of the Board may be taken without a meeting if
all members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of the
proceedings of the Board or committee.
SECTION 16. Telephone Conference. Members of the Board of Directors
or any committee of the Board may participate in any Board or committee
meeting by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other
at the same time. Participation by such means shall constitute presence in
person at the meeting.
SECTION 17. Compensation. Each director shall be entitled to
receive compensation, if any, as may from time to time be fixed by the Board
of Directors, including a fee for each meeting of the Board or any committee
thereof, regular or special, he attends. Directors may also be reimbursed by
the Corporation for all reasonable expenses incurred in traveling to and from
the place of a Board or committee meeting.
ARTICLE III
OFFICERS, AGENTS AND EMPLOYEES
SECTION 1. Number and Qualifications. The officers of the
Corporation shall be a President, a Secretary and a Treasurer, each of whom
shall be elected by the Board of Directors. The Board of Directors may elect
or appoint one or more Vice Presidents and may also appoint any other
officers, agents and
<PAGE>11
employees it deems necessary or proper. Any two or more offices may be held
by the same person, except the offices of President and Vice President, but no
officer shall execute, acknowledge or verify any instrument in more than one
capacity. Officers shall be elected by the Board of Directors each year at
its first meeting held after the annual meeting of stockholders, each to hold
office until the meeting of the Board following the next annual meeting of the
stockholders and until his successor shall have been duly elected and shall
have qualified, or until his death, or until he shall have resigned or have
been removed, as provided in these By-Laws. The Board of Directors may from
time to time elect, or designate to the President the power to appoint, such
officers (including one or more Assistant Vice Presidents, one or more
Assistant Treasurers and one or more Assistant Secretaries) and such agents as
may be necessary or desirable for the business of the Corporation. Such other
officers and agents shall have such duties and shall hold their offices for
such terms as may be prescribed by the Board or by the appointing authority.
SECTION 2. Resignations. Any officer of the Corporation may resign
at any time by giving written notice of his resignation to the Board of
Directors, the Chairman of the Board, the President or the Secretary. Any
resignation shall take effect at the time specified therein or, if the time
when it shall become effective is not specified therein, immediately upon its
receipt. Acceptance of a resignation shall not be necessary to make it
effective unless the resignation states otherwise.
SECTION 3. Removal of Officer, Agent or Employee. Any officer,
agent or employee of the Corporation may be removed by the Board of Directors
with or without cause at any time, and the Board may delegate the power of
removal as to agents and employees not elected or appointed by the Board of
Directors. Removal shall be without prejudice to the person's contract
rights, if any, but the appointment of any person as an officer, agent or
employee of the Corporation shall not of itself create contract rights.
SECTION 4. Vacancies. A vacancy in any office whether arising from
death, resignation, removal or any other cause, may be filled for the
unexpired portion of the term of the office that shall be vacant, in the
manner prescribed in these By-Laws for the regular election or appointment to
the office.
SECTION 5, Compensation. The compensation of the officers of the
Corporation shall be fixed by the Board of Directors, but this power may be
delegated to any officer with respect to other officers under his control.
SECTION 6. Bonds or Other Security. If required by the Board, any
officer, agent or employee of the Corporation shall give a bond or other
security for the faithful performance of his
<PAGE>12
duties, in an amount and with any surety or sureties as the Board may require.
SECTION 7. President. The President shall be the chief executive
officer of the Corporation. In the absence or inability of the Chairman of
the Board (or if there is none) to act, the President shall preside at all
meetings of the stockholders and of the Board of Directors. The President
shall have, subject to the control of the Board of Directors, general charge
of the business and affairs of the Corporation, and may employ and discharge
employees and agents of the Corporation, except those elected or appointed by
the Board, and he may delegate these powers.
SECTION 8. Vice President. Each Vice President shall have the
powers and perform the duties that the 8Board of Directors or the President
may from time to time prescribe.
SECTION 9. Treasurer. Subject to the provisions of any contract
that may be entered into with any custodian pursuant to authority granted by
the Board of Directors, the Treasurer shall have charge of all receipts and
disbursements of the Corporation and shall have or provide for the custody of
the Corporation's funds and securities; he shall have full authority to
receive and give receipts for all money due and payable to the Corporation,
and to endorse checks, drafts and warrants, in its name and on its behalf and
to give full discharge for the same; he shall deposit all funds of the
Corporation, except those that may be required for current use, in such banks
or other places of deposit as the Board of Directors may from time to time
designate; and, in general, he shall perform all duties incident to the office
of Treasurer and such other duties as may from time to time be assigned to him
by the Board of Directors or the President.
SECTION 10. Secretary. The Secretary shall
(a) keep or cause to be kept in one or more books provided for the
purpose, the minutes of all meetings of the Board of Directors, the committees
of the Board and the stockholders;
(b) see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the Corporation and
affix and attest the seal to all stock certificates of the Corporation (unless
the seal of the Corporation on such certificates shall be a facsimile, as
hereinafter provided) and affix and attest the seal to all other documents to
be executed on behalf of the Corporation under its seal;
(d) see that the books, reports, statements,
<PAGE>13
certificates and other documents and records required by law to be kept and
filed are properly kept and filed; and
(e) in general, perform all the duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him by
the Board of Directors or the President.
SECTION 11. Delegation of Duties. In case of the absence of any
officer of the Corporation, or for any other reason that the Board of
Directors may deem sufficient, the Board may confer for the time being the
powers or duties, or any of them, of such officer upon any other officer or
upon any director.
ARTICLE IV
STOCK
SECTION 1. Stock Certificates. Each holder of stock of the
Corporation shall be entitled upon specific written request to such person as
may be designated by the Corporation to have a certificate or certificates, in
a form approved by the Board, representing the number of shares of stock of
the Corporation owned by him; provided, however, that certificates for
fractional shares will not be delivered in any case. The certificates
representing shares of stock shall be signed by or in the name of the
Corporation by the President or a Vice President and by the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer and sealed with
the seal of the Corporation. Any or all of the signatures or the seal on the
certificate may be facsimiles. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate shall be issued, it may be issued by the Corporation
with the same effect as if such officer, transfer agent or registrar were
still in office at the date of issue.
SECTION 2. Books of Account and Record of Stockholders. There shall
be kept at the principal executive office of the Corporation correct and
complete books and records of account of all the business and transactions of
the Corporation. There shall be made available upon request of any
stockholder, in accordance with Maryland law, a record containing the number
of shares of stock issued during a specified period not to exceed 12 (twelve)
months and the consideration received by the Corporation for each such share.
SECTION 3. Transfers of Shares. Transfers of shares of stock of the
Corporation shall be made on the stock records of the Corporation only by the
registered holder thereof, or by his
<PAGE>14
attorney thereunto authorized by power of attorney duly executed and filed
with the Secretary or with a transfer agent or transfer clerk, and on
surrender of the certificate or certificates, if issued, for the shares
properly endorsed or accompanied by a duly executed stock transfer power and
the payment of all taxes thereon. Except as otherwise provided by law, the
Corporation shall be entitled to recognize the exclusive right of a person in
whose name any share or shares stand on the record of stockholders as the
owner of the share or shares for all purposes, including, without limitation,
the rights to receive dividends or other distributions and to vote as the
owner, and the Corporation shall not be bound to recognize any equitable or
legal claim to or interest in any such share or shares on the part of any
other person.
SECTION 4. Regulations. The Board of Directors may make any
additional rules and regulations, not inconsistent with these By-Laws, as it
may deem expedient concerning the issue, transfer and registration of
certificates for shares of stock of the Corporation. It may appoint, or
authorize any officer or officers to appoint, one or more transfer agents or
one or more transfer clerks and one or more registrars and may require all
certificates for shares of stock to bear the signature or signatures of any of
them.
SECTION 5. Stolen, Lost, Destroyed or Mutilated Certificates. The
holder of any certificate representing shares of stock of the Corporation
shall immediately notify the Corporation of its theft, loss, destruction or
mutilation and the Corporation may issue a new certificate of stock in the
place of any certificate issued by it that has been alleged to have been
stolen, lost or destroyed or that shall have been mutilated. The Board may,
in its discretion, require the owner (or his legal representative) of a
stolen, lost, destroyed or mutilated certificate: to give to the Corporation
a bond in a sum, limited or unlimited, and in a form and with any surety or
sureties, as the Board in its absolute discretion shall determine, to
indemnify the Corporation against any claim that may be made against it on
account of the alleged theft, loss or destruction of any such certificate, or
issuance of a new certificate. Anything herein to the contrary
notwithstanding, the Board of Directors, in its absolute discretion, may
refuse to issue any such new certificate, except pursuant to legal proceedings
under the laws of the State of Maryland.
SECTION 6. Fixing of Record Date for Dividends, Distributions, etc.
The Board may fix, in advance, a date not more than 90 (ninety) days preceding
the date fixed for the payment of any dividend or the making of any
distribution or the allotment of rights to subscribe for securities of the
Corporation, or for the delivery of evidences of rights or
<PAGE>15
evidences of interests arising out of any change, conversion or exchange of
common stock or other securities, as the record date for the determination of
the stockholders entitled to receive any such dividend, distribution,
allotment, rights or interests, and in such case only the stockholders of
record at the time so fixed shall be entitled to receive such dividend,
distribution, allotment, rights or interests.
SECTION 7. Information to Stockholders and Others. Any stockholder
of the Corporation or his agent may inspect and copy during the Corporation's
usual business hours the Corporation's By-Laws, minutes of the proceedings of
its stockholders, annual statements of its affairs and voting trust agreements
on file at its principal office.
ARTICLE V
INDEMNIFICATION AND INSURANCE
SECTION 1. Indemnification of Directors and Officers. Any person
who was or is a party or is threatened to be made a party in any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such person is a
current or former director or officer of the Corporation, or is or was serving
while a director or officer of the Corporation at the request of the
Corporation as a director, officer, partner, trustee, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust,
enterprise or employee benefit plan, shall be indemnified by the Corporation
against judgments, penalties, fines, excise taxes, settlements and reasonable
expenses (including attorneys' fees) actually incurred by such person in
connection with such action, suit or proceeding to the full extent permissible
under the Maryland General Corporation Law, the Securities Act of 1933 and the
Investment Company Act of 1940, as such statutes are now or hereafter in
force, except that such indemnity shall not protect any such person against
any liability to the Corporation or any stockholder thereof to which such
person would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct
of his office ("disabling conduct").
SECTION 2. Advances. Any current or former director or officer of
the Corporation claiming indemnification within the scope of this Article V
shall be entitled to advances from the Corporation for payment of the
reasonable expenses incurred by him in connection with proceedings to which he
is a party in the manner and to the full extent permissible under the Maryland
General Corporation Law, the Securities Act of 1933 and the
<PAGE>16
Investment Company Act of 1940, as such statutes are now or hereafter in
force; provided however, that the person seeking indemnification shall provide
to the Corporation a written affirmation of his good faith belief that the
standard of conduct necessary for indemnification by the Corporation has been
met and a written undertaking to repay any such advance unless it is
ultimately determined that he is entitled to indemnification, and provided
further that at least one of the following additional conditions is met: (1)
the person seeking indemnification shall provide a security in form and amount
acceptable to the Corporation for his undertaking; (2) the Corporation is
insured against losses arising by reason of the advance; or (3) a majority of
a quorum of directors of the Corporation who are neither "interested persons"
as defined in Section 2(a)(19) of the Investment Company Act of 1940, as
amended, nor parties to the proceeding ("disinterested non-party directors"),
or independent legal counsel, in a written opinion, shall determine, based on
a review of facts readily available to the Corporation at the time the advance
is proposed to be made, that there is reason to believe that the person
seeking indemnification will ultimately be found to be entitled to
indemnification.
SECTION 3. Procedure. At the request of any current or former
director or officer, or any employee or agent whom the Corporation proposes to
indemnify, the Board of Directors shall determine, or cause to be determined,
in a manner consistent with the Maryland General Corporation Law, the
Securities Act of 1933 and the Investment Company Act of 1940, as such
statutes are now or hereafter in force, whether the standards required by this
Article V have been met; provided, however, that indemnification shall be made
only following: (1) a final decision on the merits by a court or other body
before whom the proceeding was brought that the person to be indemnified was
not liable by reason of disabling conduct or (2) in the absence of such a
decision, a reasonable determination, based upon a review of the facts, that
the person to be indemnified was not liable by reason of disabling conduct, by
(a) the vote of a majority of a quorum of disinterested non-party directors or
(b) an independent legal counsel in a written opinion.
SECTION 4. Indemnification of Employees and Agents. Employees and
agents who are not officers or directors of the Corporation may be
indemnified, and reasonable expenses may be advanced to such employees or
agents, in accordance with the procedures set forth in this Article V to the
extent permissible under the Investment Company Act of 1940, the Securities
Act of 1933 and the Maryland General Corporation Law, as such statutes are now
or hereafter in force, and to such further extent, consistent with the
foregoing, as may be provided by action of the Board of Directors or by
contract.
<PAGE>17
SECTION 5. Other Rights. The indemnification provided by this
Article V shall not be deemed exclusive of any other right, in respect of
indemification or otherwise, to which those seeking such indemnification may
be entitled under any insurance or other agreement, vote of stockholders or
disinterested directors or otherwise, both as to action by a director or
officer of the Corporation in his official capacity and as to action by such
person in another capacity while holding such office or position, and shall
continue as to a person who has ceased to be a director or officer and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
SECTION 6. Insurance. The Corporation shall have the power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or who, while a
director, officer, employee or agent of the Corporation, is or was serving at
the request of the Corporation as a director, officer, partner, trustee,
employee, agent or fiduciary of another corporation, partnership, joint
venture, trust, enterprise or employee benefit plan, against any liability
asserted against and incurred by him in any such capacity, or arising out of
his status as such, provided that no insurance may be obtained by the
Corporation for liabilities against which it would not have the power to
indemnify him under this Article V or applicable law.
SECTION 7. Constituent, Resulting or Surviving Corporations. For
the purposes of this Article V, references to the "Corporation" shall include
all constituent corporations absorbed in a consolidation or merger as well the
resulting or surviving corporation so that any person who is or was a
director, officer, employee or agent of a constituent corporation or is or was
serving at the request of a constituent corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise shall stand in the same position under this Article V with
respect to the resulting or surviving corporation as he would if he had served
the resulting or surviving corporation in the same capacity.
ARTICLE VI
SEAL
The seal of the Corporation shall be circular in form and shall bear
the name of the Corporation, the year of its incorporation, the words
"Corporate Seal" and "Maryland" and any emblem or device approved by the Board
of Directors. The seal may be used by causing it or a facsimile to be
impressed or affixed or in any other manner reproduced, or by placing the word
"(seal)" adjacent to the signature of the authorized officer of the
Corporation.
<PAGE>18
ARTICLE VII
FISCAL YEAR
The Corporation's fiscal year shall be fixed by the Board of
Directors.
ARTICLE VIII
AMENDMENTS
These By-Laws may be amended or repealed by the affirmative vote of a
majority of the Board of Directors at any regular or special meeting of the
Board of Directors, subject to the requirements of the Investment Company Act
of 1940, as amended.
As adopted, July 12, 1990
<PAGE>1
INVESTMENT ADVISORY AGREEMENT
November 1, 1990
Warburg, Pincus Counsellors, Inc.
466 Lexington Avenue
New York, New York 10017-3147
Dear Sirs:
Counsellors Global Fixed Income Fund, Inc. (the "Fund"), a
corporation organized under the laws of the State of Maryland, herewith
confirms its agreement with Warburg, Pincus Counsellors, Inc. (the "Adviser")
as follows:
1. Investment Description; Appointment
The Fund desires to employ its capital by investing and reinvesting
in investments of the kind and in accordance with the limitations specified in
its Articles of Incorporation, as may be amended from time to time, and in its
Prospectus and Statement of Additional Information as from time to time in
effect, and in such manner and to such extent as may from time to time be
approved by the Board of Directors of the Fund. Copies of the Fund's
Prospectus, Statement of Additional Information and Articles of Incorporation,
as may be amended from time to time, have been or will be submitted to the
Adviser. The Fund desires to employ and hereby appoints the Adviser to act as
its investment adviser. The Adviser accepts the appointment and agrees to
furnish the services for the compensation set forth below.
2. Services as Investment Adviser
Subject to the supervision and direction of the Board of Directors of
the Fund, the Adviser will (a) act in strict conformity with the Fund's
Articles of Incorporation, the Investment Company Act of 1940 and the
Investment Advisers Act of 1940, as the same may from time to time be amended,
(b) manage the Fund in accordance with the Fund's investment objective and
policies as stated in the Fund's Prospectus and Statement of Additional
Information as from time to time in effect, (c) make investment decisions for
the Fund and (d) place purchase and sale orders for securities on behalf of
the Fund. In providing those services, the Adviser will provide investment
research and supervision of the Fund's investments and conduct a continual
program of investment, evaluation and, if appropriate, sale and reinvestment
of the Fund's assets. In
<PAGE>2
addition, the Adviser will furnish the Fund with whatever statistical
information the Fund may reasonably request with respect to the securities
that the Fund may hold or contemplate purchasing.
3. Brokerage
In executing transactions for the Fund and selecting brokers or
dealers, the Adviser will use its best efforts to seek the best overall terms
available. In assessing the best overall terms available for any portfolio
transaction, the Adviser will consider all factors it deems relevant
including, but not limited to, breadth of the market in the security, the
price of the security, the financial condition and execution capability of the
broker or dealer and the reasonableness of any commission for the specific
transaction and for transactions executed through the broker or dealer in the
aggregate. In selecting brokers or dealers to execute a particular
transaction and in evaluating the best overall terms available, the Adviser
may consider the brokerage and research services (as those terms are defined
in Section 28(e) of the Securities Exchange Act of 1934) provided to the Fund
and/or other accounts over which the Adviser or an affiliate exercises
investment discretion.
4. Information Provided to the Fund
The Adviser will keep the Fund informed of developments materially
affecting the Fund, and will, on its own initiative, furnish the Fund from
time to time with whatever information the Adviser believes is appropriate for
this purpose.
5. Standard of Care
The Adviser shall exercise its best judgment in rendering the
services listed in paragraphs 2, 3 and 4 above. The Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with the matters to which this Agreement relates,
provided that nothing herein shall be deemed to protect or purport to protect
the Adviser against any liability to the Fund or to shareholders of the Fund
to which the Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence on its part in the performance of
its duties or by reason of the Adviser's reckless disregard of its obligations
and duties under this Agreement.
6. Compensation
In consideration of the services rendered pursuant to this Agreement,
the Fund will pay the Adviser an annual fee calculated at an annual rate of
1.0% of the Fund's average daily
<PAGE>3
net assets. The fee for the period from the date the Fund's initial
registration statement is declared effective by the Securities and Exchange
Commission to the end of the year during which the initial registration
statement is declared effective shall be prorated according to the proportion
that such period bears to the full yearly period. Upon any termination of
this Agreement before the end of a year, the fee for such part of that year
shall be prorated according to the proportion that such period bears to the
full yearly period and shall be payable upon the date of termination of this
Agreement. For the purpose of determining fees payable to the Adviser, the
value of the Fund's net assets shall be computed at the times and in the
manner specified in the Fund's Prospectus or Statement of Additional
Information as from time to time in effect.
7. Expenses
The Adviser will bear all expenses in connection with the performance
of its services under this Agreement. The Fund will bear certain other
expenses to be incurred in its operation, including: investment advisory and
administration fees; taxes, interest, brokerage fees and commissions, if any;
fees of Directors of the Fund who are not officers, directors, or employees of
the Adviser, Provident National Bank or any of their affiliates; fees of any
pricing service employed to value shares of the Fund; Securities and Exchange
Commission fees and state Blue Sky qualification fees; charges of custodians
and transfer and dividend disbursing agents; the Fund's proportionate share of
insurance premiums; outside auditing and legal expenses; costs of maintenance
of the Fund's existence; costs attributable to investor services, including,
without limitation, telephone and personnel expenses; costs of preparing and
printing prospectuses and statements of additional information for regulatory
purposes and for distribution to existing shareholders; costs of shareholders'
reports and meetings of the shareholders of the Fund and of the officers or
Board of Directors of the Fund; and any extraordinary expenses.
The Fund will be responsible for nonrecurring expenses which may
arise, including costs of litigation to which the Fund is a party and of
indemnifying officers and Directors of the Fund with respect to such
litigation and other expenses as determined by the Directors.
8. Reimbursement to the Fund
If in any fiscal year the aggregate expenses of the Fund (including
fees pursuant to this Agreement and the Fund's administration agreement, but
excluding interest, taxes, brokerage and, if permitted by state securities
commissions, extraordinary expenses) exceed the expense limitation of any
<PAGE>4
state having jurisdiction over the Fund, the Adviser will reimburse the Fund
for such excess expense. The Adviser's expense reimbursement obligation will
be limited to the amount of its fees received pursuant to this Agreement.
Such expense reimbursement, if any, will be estimated, reconciled and paid on
an annual basis.
9. Services to Other Companies or Accounts
The Fund understands that the Adviser now acts, will continue to act
and may act in the future as investment adviser to fiduciary and other managed
accounts and to one or more other investment companies or series of investment
companies, and the Fund has no objection to the Adviser so acting, provided
that whenever the Fund and one or more other accounts or investment companies
or portfolios advised by the Adviser have available funds for investment,
investments suitable and appropriate for each will be allocated in accordance
with a formula believed to be equitable to each entity. The Fund recognizes
that in some cases this procedure may adversely affect the size of the
position obtainable for the Fund. In addition, the Fund understands that the
persons employed by the Adviser to assist in the performance of the Adviser's
duties hereunder will not devote their full time to such service and nothing
contained herein shall be deemed to limit or restrict the right of the Adviser
or any affiliate of the Adviser to engage in and devote time and attention to
other businesses or to render services of whatever kind or nature.
10. Term of Agreement
This Agreement shall continue until July 25, 1992 and thereafter
shall continue automatically for successive annual periods, provided such
continuance is specifically approved at least annually by (a) the Board of
Directors of the Fund or (b) a vote of a "majority" (as defined in the
Investment Company Act of 1940) of the Fund's outstanding voting securities,
provided that in either event the continuance is also approved by a majority
of the Board of Directors who are not "interested persons" (as defined in said
Act) of any party to this Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval. This Agreement is
terminable, without penalty, on 60 days' written notice, by the Board of
Directors of the Fund or by vote of holders of a majority of the Fund's
shares, or upon 90 days' written notice, by the Adviser. This Agreement will
also terminate automatically in the event of its assignment (as defined in
said Act).
11. Representation by the Fund
The Fund represents that a copy of its Articles of
<PAGE>5
Incorporation, filed on July 11, 1990, together with all amendments thereto,
is on file in the Department of Assessments and Taxation of the State of
Maryland.
12. Miscellaneous
The Fund recognizes that directors, officers and employees of the
Adviser may from time to time serve as directors, trustees, officers and
employees of corporations and business trusts (including other investment
companies) and that such other corporations and trusts may include the name
"Counsellors" or "Counsellors Securities" as part of their names, and that the
Adviser or its affiliates may enter into advisory or other agreements with
such other corporations and trusts. If the Adviser ceases to act as the
investment adviser of the Fund's shares, the Fund agrees that, at the
Adviser's request, the Fund's license to use the word "Counsellors" will
terminate and that the Fund will take all necessary action to change the name
of the Fund to a name not including the word "Counsellors."
Please confirm that the foregoing is in accordance with your
understanding by indicating your acceptance hereof at the place below
indicated, whereupon it shall become a binding agreement between us.
Very truly yours,
COUNSELLORS GLOBAL FIXED INCOME
FUND, INC.
By: /s/ Dale C. Christensen
President
Accepted:
WARBURG, PINCUS COUNSELLORS, INC.
By: /s/ Arnold M. Reichman
Authorized Officer
<PAGE>1
[LETTERHEAD OF WILLKIE FARR & GALLAGHER]
January 16, 1996
Warburg, Pincus Global Fixed Income Fund, Inc.
466 Lexington Avenue
New York, New York 10017
Re: Post-Effective Amendment No. 6 to Registration
Statement (Securities Act File No. 33-36066; Investment Company Act File
No. 811-06143 (the "Registration Statement")
Ladies and Gentlemen:
You have requested that we, as counsel to the Warburg, Pincus Global Fixed
Income Fund, Inc. (the "Fund"), render an opinion in connection with the
filing by the Fund of Post-Effective Amendment No. 6 to the Registration
Statement (the "Amendment") in which you intend to register under the
Securities Act of 1933, as amended (the "1933 Act"), 2,909,714 shares of
common stock of the Fund, par value $.001 per share (the "Shares").
We have examined the Fund's Articles of Incorporation, its By-Laws,
resolutions adopted by its Board of Directors, and other records, documents,
papers, statutes and authorities as we have deemed necessary to form a basis
for the opinion hereinafter expressed.
On the basis of the foregoing, and assuming compliance with the 1933 Act, the
Investment Company Act of 1940, as amended, and applicable state laws
regulating the sale of securities, and assuming further that all of the Shares
will be sold at a sales price in each case in excess of the par value of the
Shares, we are of the opinion that such Shares, when duly sold, issued and
paid for as contemplated by the Prospectus and Statement of Additional
Information included in the Amendment, will be validly and legally issued,
fully paid and non-assessable by the Fund.
<PAGE>2
We consent to your filing this opinion with the Securities and Exchange
Commission as an exhibit to the Amendment. We are members of the Bar of the
State of New York and do not hold ourselves out as being conversant with the
laws of any jurisdiction other than those of the United States of America and
the State of New York. We note that we are not licensed to practice law in
the State of Maryland, and to the extent that any opinion expressed herein
involves the law of Maryland, such opinion should be understood to be based
solely upon our review of the documents referred to above, the published
statutes of that state, and where applicable, published cases, rules or
regulations of regulatory bodies of that state.
Very truly yours,
WILLKIE FARR & GALLAGHER
By: /s/ Rose F. DiMartino
A Member of the Firm
<PAGE>1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Post-Effective Amendment No. 6 to
the Registration Statement under the Securities Act of 1933 on Form N-1A
(File No. 33-36066) of our report dated December 14, 1995 on our audit of
the financial statements and financial highlights of Warburg, Pincus
Global Fixed Income Fund, Inc. We also consent to the reference to our
Firm under the captions "Financial Highlights" and "Auditors and Counsel."
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
January 16, 1996
<PAGE>1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" and "Auditors and Counsel" and to the use of our report
dated December 15, 1992 in this Registration Statement (Form N-1A No.
33-36066) of Warburg, Pincus Global Fixed Income Fund, Inc.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
New York, New York
January 16, 1996
<PAGE>
Warburg Pincus Global Fixed Income
For the One Year Ended October 31, 1995
Total Return With Waivers:
((11,065-10,000)/10,000) = 10.65%
Total Return Without Waivers:
((10,986-10,000)/10,000) = 9.86%
For the Five Years Ended October 31, 1995
Total Return With Waivers:
((15,012/10,000)[*graphic omitted-see footnote below] -1) = 8.46%
Total Return Without Waivers:
((13,949/10,000)[*graphic omitted-see footnote below] -1) = 6.88%
- ------------------------
* The expression in parentheses is being raised to the power of 1/5.00274.
30 Day SEC Yield at 10/31/95
503,402.85 - 50,673.67
2[( ---------------------- +1)[*graphic omitted-see footnote below] -1]= 8.76%
5,717,935.851 x 11.04
- ------------------------
* The expression in parentheses is being raised to the 6th power.
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<NAME> WARBURG PINCUS GLOBAL FIXED INCOME FUND
<S> <C>
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<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
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<INVESTMENTS-AT-VALUE> 64249807
<RECEIVABLES> 1769600
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<TOTAL-LIABILITIES> 2384786
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<NET-INVESTMENT-INCOME> 6324709
<REALIZED-GAINS-CURRENT> (1301881)
<APPREC-INCREASE-CURRENT> 2015972
<NET-CHANGE-FROM-OPS> 7038800
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3445878
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4066768
<NUMBER-OF-SHARES-REDEEMED> 7231335
<SHARES-REINVESTED> 281288
<NET-CHANGE-IN-ASSETS> (26753025)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (1192491)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 773318
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1219823
<AVERAGE-NET-ASSETS> 77331777
<PER-SHARE-NAV-BEGIN> 10.45
<PER-SHARE-NII> .99
<PER-SHARE-GAIN-APPREC> .09
<PER-SHARE-DIVIDEND> .49
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.04
<EXPENSE-RATIO> .95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
